Big Disappointment

by: Mike Lux

Sat Jan 31, 2009 at 12:30


Cross-posted at HuffPo

Those of you who are regular readers know that I am an Obama loyalist. I volunteered to help out during the transition; I think it's desperately important that he succeed; I am more than willing to give him the benefit of the doubt; I have consistently defended him when some of my progressive friends have been critical; and I generally swallow my tongue when I don't agree with something because I want to be able to work quietly and constructively with his administration whenever I can. I so much believe in his transformational agenda that I have even made the decision to give all of the money I get from sales of my new book, The Progressive Revolution: How The Best In America Came To Be, to help get the big progressive pieces of that agenda on the economy, health care, and climate change passed. Sometimes, though, I just have to say something publicly, and when I read in this morning's paper and learned that the Obama economic team's bank rescue plan will include no more restrictions on executive salaries and bonuses than are in the ineffectual TARP bill because these banks might not take our billions of dollars if there were more restrictions, I knew that I had to protest.

This is exactly the kind of crap thinking that had Paulson give away $350 billion with no strings attached, and resulted in our tax dollars going not for an easing of credit, but for shareholder dividends, exec bonuses, corporate jets, and mergers- none of which has done bupkis to actually help the economy. We need some new thinking to save our economy, not this kind of rehashed Bushism. If these bastards don't want our money because we keep them from giving themselves extra tens of millions of dollars, LET THEM FAIL, LET THEM FAIL, LET THEM FAIL. I suspect most of them will take our money, because that's really their only option, and if they don't there are plenty of places that need shoring up that might actually help the real economy, so LET THEM FAIL.

President Obama, I am so happy with most of what I've seen so far: the Lily Ledbetter act, S-CHIP expansion, great new executive orders, reaching out constructively on Middle East peace, and an economic recovery bill that is great in many ways. But don't disappoint those of us who believe so strongly in you by giving into this Bush-like thinking about needing to coddle the big bank execs. If they don't want our money, fine: give it to the sectors of the economy that really need our help.  
Mike Lux :: Big Disappointment

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Big Disappointment | 41 comments
Boy Howdy! (4.00 / 7)
Guaranteed profits no matter what--that's what the British East India Company believed in. That belief--backed up by the Crown--was one of the causes of the American Revolution.

How un-American do they have to get before we say, "Enough!"???

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

They just don't get it (4.00 / 9)
Capitalism as we've known it -- as they've defined it -- is finished. The editors of The Economist always defend what exists, sometimes ably, sometimes not, but their multi-part series in last week's issue about the future of finance was one of the weakest defenses I've seen yet. I swear that you could almost see them blush as they were writing it. I do believe that they're actually scared.

The truth is that the the post-war gentleman's agreement from Bretton Woods onward has followed a downward arc toward failure which, at its present bottom, has left us with absurdities like Coalitions of the Willing on the political front, and Chinese wage slavery in the service of American gluttony on the economic front.

It must end, and it will end eventually. The assholes in Washington and New York, like Churchill before them, have managed to convince themselves that empire will last at least until the end of their watch. Perhaps it will, but I'm betting that they have far less time than they think, and if I were a praying man, my prayer would be that Obama would stop acting like a bemused bystander and understand that he's brought the real peril right into the tent with him.

[ Parent ]
John's Gray's 1997 book "False Dawn" (4.00 / 2)
A good book that predicted the global economic crisis. He would likely be very gloomy about the potential for any sort of lasting changes to improve the American economy or the global Capitalist crisis without some radical changes in the Capitalist system. Gray is a professor at London School of Economics although I think he is more a general humanites expert than an economist.
[ Parent ]
This is why I have been so critical (4.00 / 6)
of Obaama's entire economic team. the only opinions he is hearing are the right and the far right. There are very workable models that have been used in europe, but they refuse to even look at them. There are also very workable alternatives, like taking the 350 bil and starting a federal bank that will give loans and collect interest, generting revenue for the gov't. Let the banks as they currently exist fail.

On another note, they are starting the cycle all over again. A friend just got pre qualified for a 350k mortgage on a 65k income. At 5% interest the payments would be 3500 a month or over 60% of her gross income. Here comes the crash.

Obama's econ team (4.00 / 4)
are continuing the same failed, top-heavy, trickle-down model as the Republicans before them. And there I was thinking supply-side economics was finally going to be buried for good.
[ Parent ]
Math Off? (0.00 / 0)
A $350,000 mortgage (30 year fixed rate) at 5% interest has a monthly payment of about $1879. That's about 35% of your friend's gross income.

Now, that's still too high in my opinion. It's not as if your friend cannot find a lower priced house: that price ($350,000+) is way above the current median home price in every region of the country. (Yes, in certain specific neighborhoods and towns it's more moderate.) But it's not quite so ridiculous as first advertised.

[ Parent ]
Property taxes (0.00 / 0)
Property taxes are generally included in mortgage payments.  That could account for much of the difference.  Also homeowner's insurance, flod insurance, etc.  These days (post-Katrina) flood insurance is very hefty and very required in many areas.
[ Parent ]
your right I fucked up the math, but taxes and ins (0.00 / 0)
would raise  the cost by at least another 1K per month.
[ Parent ]
oddly enough (0.00 / 0)
I recall reading about (and then reading) an interview -- here, I think -- where Obama himself mentioned the Swedish solution in a positive light. Indicating that he knows about it.

So I'm not sure what circumstances and thinking are prompting his current course of action. Maybe Larry Summers really is a genius and we're all just stupid groupthinkers. Who knows. :/

[ Parent ]
In defense of Obama.. (0.00 / 0)
Not sure how to do links here but..

http://politicalticker.blogs.c...

I don't even grasp the politics of this one (4.00 / 2)
Forget the merits: I can't understand why anyone would be against such restrictions, from a purely political calculus.

This is why... (4.00 / 6)

  ...the Republican Party even exists.

  If the Democrats would ever understand that good policy is almost always also good politics, and act and legislate accordingly, the Republicans wouldn't get 10% of the vote.

  So Obama's leaning towards doing something that is, at the same time, wrongheaded, ineffective, and unpopular. The mind boggles. Did Bush leave his favorite weed behind in the Oval Office drawers or something?

  And when the Democrats get destroyed in 2010, it will come as a complete surprise to Obama and the party leadership. The rest of us will know better.  

"We judge ourselves by our ideals; others by their actions. It is a great convenience." -- Howard Zinn

[ Parent ]
"...wrongheaded, ineffective, and unpopular." (4.00 / 1)
How did this happen?

Seriously, the usual explanation that Obama totally miscalculated the Republican response to his huge concessions with the stimulus can't be right.

Zero Republican votes for the stimulus!

One minute ago everybody was celebrating Obama as the most gifted politician of his generation, and now he makes a miscalculation that anybody who skims the news could see coming from nine miles away.

Obama can't be quite so stupid.

What's going on?


[ Parent ]
banks might not take our billions of dollars (4.00 / 3)
Note to Obama administration, that's a feature not a bug. What if they held a TARP bailout and nobody came.  
It's not a feature... (0.00 / 0)
...putting aside populist rage here...

What they are concerned about is that a Bank CEO is going to say, "I don't want to lose my perks, we're going at it alone"... severely contracting loans and maybe going bankrupt in the end.

The whole purpose of the TARP was to expand money supply, if the banks don't buy into it, they will continue to contract the money supply...

So, creating a program that never gets utilized may make people feel good, but it's the same as doing nothing, but worse... 'cos the attempt would be seen as a failure, even though the effect is to do nothing...

REID: Voting against us was never part of our arrangement!
SPECTER: I am altering the deal! Pray I don't alter it any further!
REID: This deal keeps getting worse all the time!

[ Parent ]
frankly (4.00 / 2)
if your hypothetical CEO would drive the company into bankruptcy just because he can't give up his perks, that is bad management in a nutshell, the sooner he is out of the job the better.
[ Parent ]
They are all like that... (0.00 / 0)
...why do you think we got in this mess int eh first place...

First rule of business... management ALWAYS does what's best for management first, stockholders second.  It's not supposed to be that way, but, that's human nature...

REID: Voting against us was never part of our arrangement!
SPECTER: I am altering the deal! Pray I don't alter it any further!
REID: This deal keeps getting worse all the time!

[ Parent ]
So, Nationalize the Banks Already (4.00 / 1)
Good grief, the U.S. is now repeating all of Japan's mistakes. Plus the U.S. corporate executives pay themselves billions? At least Japanese executives largely avoided that.
[ Parent ]
it's not the money supply, the fed controls (4.00 / 1)
that and there is plenty. It is the credit supply and there is nothing in the TARP that forces them to make loans instead of buy other banks, which is what they have been doing.
[ Parent ]
Thanks for posting this, Mike (4.00 / 2)
Great that you're speaking up. Got link to the article that made you cringe?
Yep, just added (4.00 / 3)
[ Parent ]
I noticed one part (0.00 / 0)
Obama's officials have said they will clearly lay out the conditions for any government investment. While relatively healthy firms are unlikely to face stiff restrictions on executive compensation, companies that need more dramatic government assistance would face more punitive terms, a source said.

So it does look like they will cut the pay for the worse off firms as compared to say Wells Fargo which kept its lending fairly strict.

http://transgendermom.blogspot....
[ Parent ]
question (0.00 / 0)

Sometimes, though, I just have to say something publicly, and when I read this morning's paper and learned that the Obama economic team's bank rescue plan will include no more restrictions on executive salaries and bonuses than are in the ineffectual TARP bill because these banks might not take our billions of dollars if there were more restrictions, I knew that I had to protest.

Do you have a link to this article?

I'm a little confused (4.00 / 2)
It was my understanding that O was going to do more to crack down on bonuses and salaries.

I guess I'm a day behind.

Can I please see a link?

In any case, I'm less concerned about CEO's back account--however maddening and however juicy as a political target--than I am about the "bad bank" plan itself.  

Some links (0.00 / 0)
http://www.boston.com/news/edu...

http://www.reuters.com/article...

Though these come to the exact opposite conclusions so I couldn't really say.

http://transgendermom.blogspot....

[ Parent ]
Ah, thanks (4.00 / 4)
The claim--that we can't impose restrictions on bonuses 'cause then banks wouldn't take the "loan"--is reminiscent of the justification for the Fed's keeping the list of its recipients confidential, cause if the list were public, they wouldn't take the loan.

Anybody else getting a sinking feeling?


[ Parent ]
No, He Just Gave Them A Stern Lecture (4.00 / 4)
Because public humiliation is punishment enough.  See Libby, Scooter.

Oh, wait, he wasn't supposed to be humiliated.

How 'bout them Mets?  You paid for their stadium yet?

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

[ Parent ]
Yeah, well (3.00 / 4)
I guess this is precisely why Obama decided to "shame" them: in hopes that no one would notice he's giving 'em a pass.
[ Parent ]
Paul, (3.00 / 4)
you just don't seem to appreciate the shaming power of Obama's rhetoric.

The executives on Wall Street didn't even know what "sternly worded" meant until Obama just showed them. After being knocked about the ears by Obama metaphorically, I wonder if they'll even be conscious enough to count the billions he handed them.


[ Parent ]
I agree the CEO compensation thing may overshadow everything else (4.00 / 1)
As offensive as the compensation is, it almost seems like a red herring that will divert attention from what really matters.
To your credit (2.00 / 2)
it isn't taking you long to see Obama for what he is; an establishment toady who at least won't put you in a camp.

I'll eat my words gladly if he punishes Wall Street.

Sorry, but Geithner and Sumner did it for me (4.00 / 2)
Just more of the same. Letting the foxes guard the hen house.

Looks like we got a Clinton White house after all. More Triangulating. More selling out to Corporate "middle" way crowd.

We got an Obama White House. (0.00 / 0)
Clinton  lost the primary, remember? It's on him now.

Montani semper liberi
[ Parent ]
This is pure braindead thinking (4.00 / 1)
on the part of Obama & his econ team. They dont want CEOs squandering funds but they wont lift a finger to stop them with legislative restrictions. I think this is something Congress will have to take on themselves & force through.

If the CEOs think they can get by without restricted bailout funds, then fine. Dont give it to them.

And if Obama is afraid CEOs wont take restricted bailout money, then I take that as a sure sign they have no intention to stop squandering it.

Don't just say it here... (4.00 / 1)
Go to Whitehouse.gov and tell them in an email what you think. (You only get 500 words,so you'll have to be succinct, but do it.)  Go to your representatives's web sites and send them emails too.  We must keep the pressure on them, not just post here.  (I expect most of you are already doing that, but if not, never let up on directly letting them know what we think.)  We must hold their feet to the fire. Business as usual must stop!!!!
Proposal: Can Summers (4.00 / 2)
As Obama's chief economic advisor, Summers is likely the single figure most responsible for the craven genuflections to Wall Street (O's rhetorical brickbats notwithstanding) which have defined the administrations response to the credit crisis thus far.

We should demand his resignation.  Pete DeFazio seems to agree.

Are you on board, Mike?  

Nadler's no fan, either. (4.00 / 8)
When I talked with Reps. Jerrold Nadler (D-NY) and Pete DeFazio recently about the fate of mass transit in the stimulus bill, one sentiment came through loud and clear. Nadler put it more subtly: "There are some people in the administration who are not enamored of infrastructure," he said.

Hmmm, could these unnamed infrastructure foes have a name that rhymes with Marry Plummers? DeFazio was less shy about his discomfort with the centrist brand of economics espoused by some Clinton vets in the new administration.

DeFazio deemed it "very unfortunate" that former Clinton economic adviser Larry Summers has claimed a similar hold on Obama's ear. "Harvard had it right," the progressive Democrat quipped -- referring to the Ivy League university's jettisoning of Summers from its presidency in the wake of a scandal over his remarks on women's intellectual abilities.

http://tpmdc.talkingpointsmemo...

Good things appointments don't matter.

[ Parent ]
Lies and theft (4.00 / 1)
This bailout is nothing more than outright theft of taxpayer money.  Read the posts about The Great American Theft, complete with links to Federal Reserve Document proving the theft at http://enlightenedillumination...  If you think you're angry now, wait until you see this!
Is this all you have to complain about? (0.00 / 0)
"Wall Street bonuses" aren't only for the extremely highly paid - they are how the financial industry works, on all levels:

http://www.google.com/hostedne...

They've already dropped significantly:

http://www.businessweek.com/ap...

Seems to me there are many, many more important issues, like making sure the bailout money actually spurs lending or takes toxic assets out of the system.

I expected abit better from you Mike (0.00 / 0)
David and paul do unsustansioated outrages everyday based on pure speculative and lazy reporting (that incidently they used to bash in the bush era). Get the facts right before being disappointed and misleading (others).

http://www.abcnews.go.com/Poli...

"The American people will not excuse or tolerate such arrogance and greed," Obama said in the video and radio message released today. "Even as they petitioned for taxpayer assistance, Wall Street firms shamefully paid out nearly $20 billion in bonuses for 2008."

Administration officials challenged a report in The Washington Post that suggested Obama was unlikely to tighten restrictions on compensation for banks that accept bailout funds, saying the report was "simply untrue."

White House and Treasury officials said the president will soon crack down on those big bonuses, shareholder enrichment and overall accountability.


Correction to above (0.00 / 0)
unsubstantiated*
[ Parent ]
Big Disappointment | 41 comments
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