IN THiS EDITON:
- Too Politically Connected To Fail
- What’s Wrong with a Phone Call?
- Nobel Peace Prize: “War is Peace,” “Freedom is Slavery,” “Ignorance is Strength.”
- My Comment: Perhaps all we need to know is that Alfred Nobel was an arms manufacturer and invented dynamite
- Obama as Hapless Political Object: Is anyone else sensing a pattern here?______________________________________________________________________
Too Politically Connected To Fail In Any Crisishttp://baselinescenario.com/2009/10/08/too-politically-connected-to-fail-in-any-crisis/Over the past 30 years Wall Street captured the thinking of official Washington, persuading policymakers on both sides of the aisle not to regulate (derivatives), to deregulate (Gramm-Leach-Bliley), not enforce existing safety and soundness regulations (VaR), and to stand idly by while millions of consumers were misled into life-ruining financial decisions (Alan Greenspan).
This was pervasive cultural capture or, to be blunter, mind control. But when the crisis broke it was not enough. Having powerful people generally on your side is not what you need when all hell breaks loose in financial markets. Official decisions will be made fast, under great pressure, and by a small group of people standing up in the Oval Office.
If you run a big troubled bank, you need a man on the inside – someone who will take your calls late at night and rely on you for on the ground knowledge. Preferably, this person should have little first-hand experience of the markets (it was hard to deceive JP Morgan and Benjamin Strong when they were deciding whom to save in 1907) and only a limited range of other contacts who could dispute your account of what is really needed.
Goldman Sachs, JPMorgan, and Citigroup, we learn today, have such a person: Tim Geithner, Secretary of the Treasury.
We already knew, from the NYT, that most of Geithner’s contacts during 2007 and 2008 were with a limited subset of the financial sector – primarily the big Wall Street players who were close to the New York Fed (including on its board). And the announcement of his appointment was widely regarded as very good news for those specific firms.
But Geithner himself has always insisted that his policies are intended to help the entire financial system and thus the whole economy.
“SECRETARY TIMOTHY GEITHNER: I’ve been in public service all my life. I’ve spent all my life working in government on ways to make our financial system stronger, better economic policy for this country. That’s the only thing I’ve ever done. And I would never do anything and be part of any policy that’s designed to benefit some piece of our financial system. The only thing that we care about and the only obligation I have is try to make sure this financial system is doing a better job of meeting the needs of businesses and families across the country.” Interview on Lehrer NewsHour, May 8, 2009
Geithner’s defenders insist that his specific contacts while President of the NY Fed were a function of that position; “he was only doing his job.”
But today’s AP report, based on looking at Geithner’s phone records, from the inauguration through July, suggest something else. How can anyone build an accurate picture of conditions in the entire crisis-ridden financial sector primarily from talking to a few top bankers?
The list of phone calls is not the largest banks, because some of the biggest are hardly represented (e.g., Wells Fargo), it’s not the most troubled banks (e.g., Bank of America had little contact), and it’s not even investment banker-types who were central to the most stressed markets (Morgan Stanley was not in the inner loop). And small and medium-sized banks (and others) always bristle at the suggestion that their interests are in alignment with those of, say, Goldman Sachs.
Geithner’s phone calls were primarily to and from people he knew well already - who had cultivated a relationship with him over the years, shared nonprofit board memberships, and participated in the same social activities. These are close professional colleagues and in some cases, presumably, friends.
The Obama administration had to rescue large parts of the financial sector, given the situation they inherited. But it absolutely did not have to run the rescue in this exact fashion – bending over backwards to be nice to leading bankers and allowing their banks to become even larger. Saving top executives’ jobs under such circumstances is not best practice, it’s not what the US advises to other countries, it’s not what the US tells the IMF to implement when it helps clean up failed banking systems, and it’s not what the FDIC implements for failed banks under its auspices.
The idea that you could leave big US bank bosses in place (or let them get stronger politically) and do meaningful regulatory reform later has always seemed illusory – and this strategy now appears to be in serious trouble. But presumably Mr. Geithner’s financial advisers told him this was the right thing to do.
By Simon Johnson
Written by Simon Johnson
October 8, 2009 at 8:28 am
Posted in Commentary
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What’s Wrong with a Phone Call?http://mail.google.com/mail/?hl=en&tab=wm#inbox/1243bce36faa6beeYesterday Simon pointed out the AP story highlighting Tim Geithner’s many contacts with a few key Wall Street executives — primarily Jamie Dimon, Lloyd Blankfein, Vikram Pandit, and Richard Parsons — while leading the government’s rescue efforts as Treasury secretary. It’s certainly useful for the nation’s top economic official to talk to people in the banking industry, and it’s also useful for him to talk to banks that are being bailed out by the government. But the AP story did come up with a few important distinctions. Geithner talked to these Wall Street executives more than the key people in Congress — Barney Frank and Christopher Dodd — that he needs to pass his regulatory reform plan. And he talked to them much more than to, say, Bank of America, which is equally big and equally in debt to the government. So to be clear, Geithner is talking to these people more than dictated by the requirements of his job (or he’s not talking to Ken Lewis enough).
Still, you could say, what’s wrong with that? Can’t Tim Geithner talk to whomever he wants to talk to?
Of course he can, in a legal sense, and no one is saying he is doing anything illegal. All the evidence is that Geithner is a man of unassailable integrity, and a modest, courteous guy to boot.
But as the lobbyists have known for decades, the key to political power in the United States is access. Under-the-table bribes are relatively rare. The revolving door (government officials taking lucrative jobs at the companies they used to oversee) is important, but of little use when it comes to the very top people. Paul O’Neill, John Snow, and Henry Paulson were already easily rich enough to overlook such temptations (although Snow did leave Treasury to become chairman of Cerberus); Geithner may not be a mega-millionaire, but he already turned down his shot at being CEO of Citigroup in 2007.
Instead, if you want to sway some of the top people in government, the most important thing is to talk to them. All of us are influenced by the information and opinions that we are exposed to. Many people have a tendency to agree with either the first person or the the last person they spoke to on a particular issue, regardless of what other information they take in. (Where Geithner falls on that spectrum I have no idea.) This is why lobbyists make so much money; they sell access.
If, in the midst of a financial crisis, you get a disproportionate share of your advice from a few select Wall Street veterans with enormous personal interests in your decisions, you will be swayed a certain way. This is particularly worrying if you have spent the last several years even more deeply steeped in that circle, because you will be getting information and ideas that are confirming your prior beliefs. It is also worrying if, as was the case this past year, you do not have the time for detailed fact-finding or empirical studies, and instead you have to make important decisions based purely on logic and conjecture. Instead, you (and the public) would be better served going out of your way to talk to people who do not share your prior perspective and are likely to disagree with you. Now, the Obama administration is nowhere near as bad as the Bush administration, which disdained talking to its critics; this administration has reached out to its intellectual opponents, for example in the famous White House dinner with Krugman and Stiglitz. But one dinner does not balance eighty phone calls.
There’s nothing scandalous about the fact that Tim Geithner talks to the CEOs of Goldman, JPMorgan, and Citi a lot. It’s just a fact. It’s a fact that demonstrates the deep linkages between the thinking inside Treasury and the thinking on Wall Street (and yes, I know Citi and JPMorgan are in Midtown). It’s also one reason I have little interest in conspiracy theories — who needs a conspiracy when you have a sympathetic ear in the Treasury Department that you can get access to regularly? As we’ve said before, the key factor throughout this financial crisis has been political power. And if that power is composed of the power of ideas and the power of relationships, so much the better.
By James Kwak
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Warmonger Wins Peace Prize By Paul Craig Roberts
http://www.informationclearinghouse.info/article23681.htmOctober 09, 2009 "Information Clearing House" -- It took 25 years longer than George Orwell thought for the slogans of 1984 to become reality.
“War is Peace,” “Freedom is Slavery,” “Ignorance is Strength.”
I would add, “Lie is Truth.”
The Nobel Committee has awarded the 2009 Peace Prize to President Obama, the person who started a new war in Pakistan, upped the war in Afghanistan, and continues to threaten Iran with attack unless Iran does what the US government demands and relinquishes its rights as a signatory to the non-proliferation treaty.
The Nobel committee chairman, Thorbjoern Jagland said, “Only very rarely has a person to the same extent as Obama captured the world’s attention and given its people hope for a better future.”
Obama, the committee gushed, has created “a new climate in international politics.”
Tell that to the 2 million displaced Pakistanis and the unknown numbers of dead ones that Obama has racked up in his few months in office. Tell that to the Afghans where civilian deaths continue to mount as Obama’s “war of necessity” drones on indeterminably.
No Bush policy has changed. Iraq is still occupied. The Guantanamo torture prison is still functioning. Rendition and assassinations are still occurring. Spying on Americans without warrants is still the order of the day. Civil liberties are continuing to be violated in the name of Oceania’s “war on terror.”
Apparently, the Nobel committee is suffering from the delusion that, being a minority, Obama is going to put a stop to Western hegemony over darker-skinned peoples.
The non-cynical can say that the Nobel committee is seizing on Obama’s rhetoric to lock him into the pursuit of peace instead of war. We can all hope that it works. But the more likely result is that the award has made “War is Peace” the reality.
Obama has done nothing to hold the criminal Bush regime to account, and the Obama administration has bribed and threatened the Palestinian Authority to go along with the US/Israeli plan to deep-six the UN’s Goldstone Report on Israeli war crimes committed during Israel’s inhuman military attack on the defenseless civilian population in the Gaza Ghetto.
The US Ministry of Truth is delivering the Obama administration’s propaganda that Iran only notified the IAEA of its “secret” new nuclear facility because Iran discovered that US intelligence had discovered the “secret” facility. This propaganda is designed to undercut the fact of Iran’s compliance with the Safeguards Agreement and to continue the momentum for a military attack on Iran.
The Nobel committee has placed all its hopes on a bit of skin color.
“War is Peace” is now the position of the formerly antiwar organization, Code Pink. Code Pink has decided that women’s rights are worth a war in Afghanistan.
When justifications for war become almost endless--oil, hegemony, women’s rights, democracy, revenge for 9/11, denying bases to al Qaeda and protecting against terrorists--war becomes the path to peace.
The Nobel committee has bestowed the prestige of its Peace Prize on Newspeak and Doublethink.
Paul Craig Roberts was Assistant Secretary of the Treasury in the Reagan administration. He is coauthor of The Tyranny of Good Intentions.He can be reached at: PaulCraigRoberts@yahoo.com
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Perhaps all we need to know is that Alfred Nobel was an arms manufacturer and invented dynamite}
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Is anyone else sensing a pattern here?By David Michael Green
http://www.informationclearinghouse.info/article23687.htmIs anyone else sensing a pattern here? It takes a real artist to render a crushing majority into a hapless political object.
And Barack Obama is a real artist.
He’s had quite an impressive week. At least for an anvil.
Here’s one New York Times headline, regarding the Olympics debacle: “Chicago Is Rejected in First Round of Voting”. Impressive.
Here’s another: “Jobless Report Is Worse Than Expected; Rate Rises to 9.8%”. Can you say “Bye-bye, Barack”?
Ah, but he was actually just warming up. David Paterson, the governor of New York, bitch-slapped the president for being stupid enough to lean on Paterson to get out of the 2010 race. Paterson is a disaster as governor, and Obama is worried that he’ll drag down the Democratic ticket, lowering the president’s majorities in Congress.
The first problem with that calculus is that there are fifty states in the union, notwithstanding the natural arrogance of New Yorkers who tend to think they own the planet. The Democratic Party’s problems are far bigger than New York. They begin on one end of Pennsylvania Avenue, and end on the other. As usual, most voters will be using the mid-term elections as a gut-check on their feelings about the current government. If the inept, cowardly and inert Mr. Obama needs someone to resign in order to save the party, that dude in the mirror with the big ol’ grin would be the most efficacious choice. Charlie Cook is now giving the Democrats only a fifty-fifty chance of retaining their majority in the House, which is now a whopping 79 seats. Man, you have to really work at it to blow something that badly in nine months time.
The second problem with asking Paterson to step out of the race to save Democratic majorities in Congress is that Obama has them already, in lopsided amounts, and he’s not doing a damn thing with them. Instead of kicking some butt to line his own caucuses up and forcing them to pass some real serious legislation that the president demands (see Bush, George W, for illustration. Also, Reagan, Ronald W.; Johnson, Lyndon B.; and Roosevelt, Franklin R.), this fool is doing deals with Republicans who are trying to destroy him, and the very predatory industries that are precisely the problem with American healthcare. I guess he must think that the GOP is just kidding. You know, like they were with Clinton. In any case, why worry about maintaining your majority if you have no intention of ever actually using it?
And the last reason that Obama is idiotic for meddling in state and local politics is because he was sent to Washington to save the country from the sixteen or so serious crises his predecessor bequeathed him, and about all he has going for him is the good will of the public who gave him the job. Spending your time dicking around with who should be the Democratic Party’s nominee for municipal dog-catcher is not exactly what people had in mind when they gave him this mandate. By going to Europe to beg for the Olympics, or by immersing himself in local politics, this chump is spending his political capital at a furious pace. It wouldn’t even be worth the effort if he was getting what he was asking for. But of course it’s far worse that both Paterson and the IOC slammed the door in his face, as publicly and as emphatically as imaginable. If Obama taped a “kick me” sign to his back, he could hardly signal any better his ineptitude and his willingness to get rolled at every conceivable opportunity.
There’s more, of course. Another headline reports that “Panel Finishes Work on Health Bill Amendments”. The public option, already a weak sister to any real reform of the predatory wealth extraction system masquerading as national healthcare, was of course voted down by the Senate Finance Committee referred to in the title. Obama has yet to seriously weigh in on any preferences he might have. Apparently he is going to wait until the end of the legislation process. Assuming that he actually has any preferences – and I don’t, unless you count carrying water for corporate power and Wall Street – how astonishingly stupid is that as a strategy? After all the grief and months of effort Congress has gone through to maybe produce a bill, is it conceivable that they’d want to entertain some major new change at the last minute?
Then there’s Afghanistan, where the president has his own general running around painting him into a policy corner with only one option. Any military guy who tried that under Bush got summarily cashiered, even though they were actually telling the truth. You know, like maybe 160,000 GIs weren’t gonna be sufficient to occupy a country of 25 million pissed-off Iraqis. Say that and your career was over, Shinseki-style.
Is anyone else sensing a pattern here?
Obama would make a great nineteenth century president. You know, all those guys with names you can never remember, because they pretty much didn’t really do anything? Back in those days, Congress was king, and presidents – except during wartime – were essentially glorified clerks, executing the Congressional will, as per their Constitutional duty. That’s certainly one way to do it. It’s just that it pretty much isn’t what people have come to want and expect for the last century or so. And it sure as hell isn’t what Obama promised in the election.
But he has really specialized in being an acted-upon object, rather than a political protagonist, despite possessing the most powerful position in the world, commanding majorities in Congress, an initially adoring public wishing him tons of good will, and all manner of crises to warrant if not demand bold action. In his reticence he is not only carrying forward a fine Democratic Party tradition of recent decades, but in fact refining it into an art form. The pattern works like this: Republicans charge like bulls through china shops and grab the mantle of power, proceeding then to ram their program through, no matter the casualties. When they reach levels of greed, corruption and failure so excessive that even comatose Americans can no longer stand it, some effete Democratic stooge named Carter or Clinton or Obama is called in to hold down the fort long enough for the regressives to regroup and start the cycle again. But Obama in action – better rendered as ‘Obama’s inaction’ – makes Clinton look like a litter full of Mike Tysons crammed into an overheated pressure chamber by comparison.
It’s astonishing how Democrats can never seem to block anything the hard-right wants to do, even when they have majorities, while the GOP kills everything the Democrats supposedly want, even with minuscule minorities in Congress. Gee, one could almost get the impression that Democrats don’t really want anything much different from Republicans, but just have to adopt a different alt-persona to hide their intentions from the public. Republicans use guns, god, gays and Gaddafi as distractions from corporate looting. Democrats strap on their cardigan sweaters and try really, really hard to do something, but gosh-darned it, just never seem to get anywhere.
As for our friend Mr. Obama, he seems busy unlearning every lesson of the last three decades. He doesn’t appear worried that the right will challenge his legitimacy as president ‘cause, of course, they never did that to Carter or Clinton. He doesn’t seem worried that they’ll happily destroy the country if necessary in order to wreck his presidency because, of course, there’s little precedent for that. He doesn’t much care to use the bully pulpit and strong-arm Congress to get what he wants because, of course, that never got Reagan or Bush anywhere.
I can’t believe I’d ever say this, but the question Obama should be asking right about now, is “What would Bush do?”
I’ll tell ya what. He’d jam his legislation down the throats of the other party, putting the fear of god in them if they dared to oppose the emperor. He’s rip people’s lungs out and stuff them back through their eye sockets if they looked at him cross-eyed. He’d lie to members of his own party and carpet bomb their entire home neighborhoods if they dared vote against him. If any media talking head didn’t tell the lies they were programmed to speak, he’d kidnap their kids and send them to Gitmo, treating them a good waterboarding for every one of their birthdays. And, he’d call in Rove to stomp some people good, the nice Republican way.
What would that look like? Here’s journalist Ron Suskind relating an inside taste of what he observed while waiting outside the Ol’ Karl’s office for an interview, back when he was running the White House political operation: “Rove was talking to an aide about some political stratagem in some state that had gone awry and a political operative who had displeased him. I paid it no mind and reviewed a jotted list of questions I hoped to ask. But after a moment, it was like ignoring a tornado flinging parked cars. ‘We will fuck him. Do you hear me? We will fuck him. We will ruin him. Like no one has ever fucked him!’ As a reporter, you get around—curse words, anger, passionate intensity are not notable events—but the ferocity, the bellicosity, the violent imputations were, well, shocking. This went on without a break for a minute or two. Then the aide slipped out looking a bit ashen, and Rove, his face ruddy from the exertions of the past few moments, looked at me and smiled a gentle, Clarence-the-Angel smile. ‘Come on in.’ And I did. And we had the most amiable chat for a half hour.”
Why won’t Obama do this? Why won’t he unleash all the powers at his disposal, knock heads together, and smash political opponents to smithereens in order to get his way? Two reasons. First, he wasn’t a complete personal screw-up for the last half century, acknowledged even by his own parents to be a total embarrassment. He therefore doesn’t have the burning need to show the world they’ve been wrong about him his whole life, like a certain other fellow recently seen roaming the halls of the West Wing.
The other reason is that Obama doesn’t actually appear to be doing anything that requires any particular toughness. He’s not trying to sell a bullshit war or dismantle Social Security, like Bush. He’s not trying to end legal and institutional racism in a country where it was as pervasive as bibles in ‘Bama, like Lyndon Johnson did. He’s not attempting to bring the country kicking and screaming into the twentieth century, even after it was already one-third over, like FDR was.
In fact, he doesn’t really appear to be doing much of anything, including producing the much-vaunted ‘change’ we heard endlessly about during last year’s campaign. Unless, of course, you count the nice demeanor with which he continues the predatory policies of Reagan, Clinton, and the Bushes. This is essentially George W. Bush’s third term. It’s Barry in the Bush with Smiles.
Obama more or less just seems to want to hang for a while, passively swaying in whatever winds happen to be blowing through at the moment. That might have worked in the 1950s, or even the 1970s, but not today. The brownshirts of the American right have been playing for keeps for some time now. And, while it’s true that they can be their own worst enemy in normal times, these are hardly normal times. Failing to address the real economic pain people are feeling, failing to provide remotely meaningful healthcare reform, failing to clean-up the corporate predators slamming the public with bad mortgages, sky-high credit card interest rates and bailouts of the already rich – all of these are an invitation for some change Obama can believe in, especially in 2012. If he insists on being a political object, the right will gladly turn him into one. It will be a freakin’ anvil too, not the fifth face on Mount Rushmore.
This is not kid’s stuff. These mobsters are possessed of insatiable greed, and they are clever beyond belief at mobilizing the anxieties and inadequacies of a public already dumbed-down to a level of political immaturity that can barely keep pace with the amped-up fires of their personal rage to which it’s dangerously coupled. How many re-run episodes of this mini-series do we need to see before we get clear on how it turns out?
The right is wrong on nearly everything, of course – the elites because they lie, and the shock troops because they’re frightened of their own shadows and therefore find blessed relief in every possible palliative from the pope to Palin. But they are correct about Obama being a complete patsy. They like to bring that up in the foreign policy context, because it’s good for scaring voters, and because it doesn’t remind moderates of just who is actually rolling this punk here at home (a very fine example of which was provided by the cheers that went up from our nice super-patriots when America lost the Olympics bid). But the truth is that a movement that should have been discredited to the point of annihilation by its very own actions is now instead setting the agenda in Washington, and the guy who won the landslide seems busy trying to push the mud back up the hill so that he can be buried by it himself, instead of the people who pretty much literally want to kill him.
I really don’t know what to say or think about this dude anymore. The way democracy is supposed to work is that his desire to hold office and the public’s preference for certain policies should reinforce each other and impel us toward a mutually satisfying presidency. Instead, though, he trucks along seemingly oblivious to the fact that the exact opposite is occurring.
This country is sinking in every way imaginable, and he will be held to blame in 2010 and 2012.
And so he should be.
It’s just that that will also mean the return of the monster set, absolutely foaming at the mouth after four years in the wilderness not holding the presidency to which they believe they’re fully entitled to own.
And then Obama will join Clinton, running around the world making speeches and writing books. Maybe they’ll even do joint appearances.
Thanks for that, Barack. You’re a real patriot.
Oh well. At least you got the important stuff right.
You won’t have ruffled any feathers while being president.
David Michael Green is a professor of political science at Hofstra University in New York. He is delighted to receive readers' reactions to his articles (dmg@regressiveantidote.net), but regrets that time constraints do not always allow him to respond. More of his work can be found at his website, www.regressiveantidote.net.
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