Frank Rich of the NYTimes provides another update to this article in his opinion piece “After the Massachusetts Massacre”. Rich argues that the problem for President Obama has been that he failed to make jobs and financial regulation top priorities. Here is the core of what he had to say:
Obama’s plight has been unchanged for months. Neither in action nor in message is he in front of the anger roiling a country where high unemployment remains unchecked and spiraling foreclosures are demolishing the bedrock American dream of home ownership. The president is no longer seen as a savior but as a captive of the interests who ginned up the mess and still profit, hugely, from it.That’s no place for any politician of any party or ideology to be. There’s a reason why the otherwise antithetical Leno and Conan camps are united in their derision of NBC’s titans. A TV network has become a handy proxy for every mismanaged, greedy, disloyal and unaccountable corporation in our dysfunctional economy. It’s a business culture where the rich and well-connected get richer while the employees, shareholders and customers get the shaft. And the conviction that the game is fixed is nonpartisan. If the tea party right and populist left agree on anything, it’s that big bailed-out banks have and will get away with murder while we pay the bill on credit cards — with ever-rising fees.
This underlines the crux of my and many others comments. With the Volcker announcement on Bank reform, there is the first signs that the Obama administration is changing direction and getting serious about substantial financial reform. But with lobbying and campaign financing unleashed by the Supreme Court, this direction could be subject to lobbying change.
Update 1: Jan 12, 2010 – The Dealbook blog at the New York Times has taken the unprecedented step of providing an extensive preface to a most provocative, yet logical post by fellow NYTimes writer Frank Rich – The Other Plot to Wreck America. This preface and subsequent post picks up and defines much more comprehensively the arguments made in Takethe5th back in November of last year. Basically Frank Rich argues clearly that more so than al-Qaeda, our very own Wall Street Banking community poses a greater threat to the well being of Americans. Here are some salient points made from the Dealbook Preface.
What we don’t know will hurt us, and quite possibly on a more devastating scale than any Qaeda attack. Americans must be told the full story of how Wall Street gamed and inflated the housing bubble, made out like bandits, and then left millions of households in ruin. Without that reckoning, there will be no public clamor for serious reform of a financial system that was as cunningly breached as airline security at the Amsterdam airport. And without reform, another massive attack on our economic security is guaranteed. Now that it can count on government bailouts, Wall Street has more incentive than ever to pump up its risks — secure that it can keep the bonanzas while we get stuck with the losses.
The window for change is rapidly closing. Health care, Afghanistan and the terrorism panic may have exhausted Washington’s already limited capacity for heavy lifting, especially in an election year. The White House’s chief economic hand, Lawrence Summers, has repeatedly announced that “everybody agrees that the recession is over” — which is technically true from an economist’s perspective and certainly true on Wall Street, where bailed-out banks are reporting record profits and bonuses. The contrary voices of Americans who have lost pay, jobs, homes and savings are either patronized or drowned out entirely by a political system where the banking lobby rules in both parties and the revolving door between finance and government never stops spinning.
It’s against this backdrop that this week’s long-awaited initial public hearings of the Financial Crisis Inquiry Commission are so critical. This is the bipartisan panel that Congress mandated last spring to investigate the still murky story of what happened in the meltdown. Phil Angelides, the former California treasurer who is the inquiry’s chairman, told me in interviews late last year that he has been busy deploying a tough investigative staff and will not allow the proceedings to devolve into a typical blue-ribbon Beltway exercise in toothless bloviation.
He wants to examine the financial sector’s “greed, stupidity, hubris and outright corruption” — from traders on the ground to the board room. “It’s important that we deliver new information,” he said. “We can’t just rehash what we’ve known to date.” He understands that if he fails to make news or to tell the story in a way that is comprehensible and compelling enough to arouse Americans to demand action, Wall Street and Washington will both keep moving on, unchallenged and unchastened.
Here is our original posting from November 11th, 2009
The Obama administration is earning top marks so far for its efforts in Foreign Affairs as manifested in the Nobel Peace Prize; mixed results on its domestic programs as measured in housing reforms, rescuing the auto companies and health care reform; but it is starting to earn serious failing grades on its overall economic and financial reforms.
Take a listen to these two discussions on You Tube. Yes they are heated and passionate; but also they have a strong core of truth that is quite damaging for Obama and key Democratic Senators and Congressmen – they are acting not in the interests of the American people but rather working much more mightily for Wall Street lobbyists and major corporate campaign contributors.
The case of the financial industry and Goldman Sachs is so telling. Goldman contribute hugely to both US political parties not only in dollars but also in high-level 1-3 year postings. And Goldman profits mightily from these dollar and manpower investments. Goldman received not $10B [which Goldman constantly reminds us they quickly paid off with interest]. They received directly $23B from the US because Goldman’s AIG exposure of $13B was made 100% whole by taxpayers. Lehman Brothers and Bear Stearns, Goldmans biggest competititors, were allowed to fail while a Goldman man , Henry Paulson, was the key decider at Treasury. Ditto as Goldman was allowed to change to being a bank holding company with access to Federal funds at the lowest possible rates and with additional protection for their capital funds. This is services rendered by the Federal government worth additional billions of dollars to Goldman. Meanwhile Goldman is raising its bonuses paid to its work force to between $16B and $23B which will be a 40% increase at the lowend while most Americans have seen either job losses or cost-cutting wage losses continue to be the order of the day among corporates. And banks who have gained $trillions in support are still not making loans to small businesses and consumers except at cutthroat rates. Of course this cuts off consumer incomes needed to re-inflate the economy. Not good.
So while the Republicans implode on general policy being set by Rush Limbaugh, Sarah Palin and Fox News, the Democrats have a huge Achilles heel, their financial and economic policy is one-sidedely oriented toward rescuing the financial institutions [which are indeed shaky] while doing much less for families, homeowners, and small to medium size businesses. The problem is that most major Democratic players including the President appear to be beholden to the financial and corporates elites whose huge campaign contributions helped them to power.
Now the immediate problem may not be as large to the Democrats as it first might appear because the Republicans are loath to point out these financial and economic follies because it endangers the very same sponsors/contributors who make equal dollops to Republican coffers. So Republicans are out to generalize the economic and financial mess. Thus, now one can understand the Republican Tea Party line of attack, get President Obama fully responsible for Budget deficits and job losses without having to commit to any Republican financial reforms or job creation investments that their corporate/financial sponsors do not approve of. Sound more and more like a Bautocracy?
The worst part of this Bautocracy is the string of huge mistakes the US political leadership is now making on a regular basis which are devastating, “friendly-fire” blows to the US Economic, Political and Social Welfare:
0)A President who was “elected” by an unfair cloture of counting the votes in Florida undermining the legitimacy of one of the most important votes in the US which now every 2 bit dictator in the world uses as defense for their “Mugabi-like” abusive clings to power.
1)A President and Executive Administration unwilling to listen to or contemplate [=”connect the dots”] the possibility of a terrorist attack of 9/11 proportions on US soil.
2)A neo-conservative misdirection of US military resources in Iraq rather than Afghanistan/Pakistan where Al Qaeda still survives and plots. The cost in lives is thousands, in military stress untold, in misdirected dollars=> $trillions.
3)Increasingly succumbing to the wishes of financial elites who, despite the progression of increasingly devastating financial fiascoes in the 1990’s of the Savings & Loan/Resolution Trust debacle, LongTerm Capital Management failure, and the DOT.Com bust – were able a)to dismantle all meaningful financial regulatory reform providing the pre-conditions for the Housing/Banking Bust of 2007-2009 and b)to foster the fiction of efficient and effective capital markets while in reality those markets were becoming opaque, secretive, and subject to manipulation such that financial derivative exposures [and not just housing ones] continue to cripple World Financial markets.
4)Because of these misdirected fundings, there has been a measurable loss of international leadership in health, education, and welfare for US citizens. Now China and Asia lead both economic growth and technical innovation while Europe and South America lead with Economic and/or Social Reform. The US is unable to produce anything constructive in Climate Change reform other than to help ring the bell.
Inevitably the price of Bautocracy is leadership that can’t cope and address problems with any concerted effectiveness as the buys that twine prevent realistic assessment and solutions of national impact. In a Bautocracy inevitably you get what you pay for .. or else.<
Bautocracy – a political system allowing financial elites to buy access to elected representatives such that 1 man, 1 vote can be bypassed.
Robert Reich, Former Secretary of Labor’s Commentary on Goldman from July of this year.