Mark Mellman's latest Hill column captures the essence of the moment, and echoes what I have been telling my friends for a while: this is the most unpredictable election in at least a dozen years- arguably the most unpredictable in my political career (which has been a 30-year run so far). I've said it over and over again, and it remains true: you look at some data, and it is easy to see all the conventional wisdom about a Republican tidal wave coming true. Another set of data tells you this may be a surprising year in terms of Democrats holding their own. We just don't know the last-minute factors which will turn this one way or another.
If the Obama team hadn't decided that outside efforts to help candidates were to be discouraged at all costs, and our groups working on campaigns weren't being outspent 7-1 by the Chamber of Commerce with their foreign money, the Koch brothers, and Karl Rove's banking, oil, and insurance company buddies, I think we'd have a better than even chance to do better than expected and hold the House and Senate. The Republicans' completely secretive corporate money is just overwhelming us in a lot of places, and it is spreading the field by putting lots of formerly safe seats into real danger. It is easy to imagine losing 55 or 60 seats in the House.
But this whole populist anti-Wall Street, anti-corporate special interest thing is still stirring around on our side, too, and there is real evidence that it is working for Democrats in a lot of key races. Check out this number from a Bloomberg poll:
BLOOMBERG NATIONAL POLL: Would it make "you more likely or less likely to support a particular candidate .... [if that] Campaign was aided by advertising paid for by anonymous business groups"? More likely: 9% ... Less Likely: 47% ... Would Not Matter: 41% ... Not Sure: 3%
We've been seeing numbers like that all over the place in different races, and more and more Democratic candidates are picking up on the message and going on offense against the sleazy corporate ads flooding their districts. Meanwhile, activists all over the country are doing local demonstrations taking on these corporate advertisers with their undisclosed donations: there were 52 events around the country by MoveOn volunteers alone. And now the White House and DNC are getting into the act, attacking the Chamber and American Crossroads and their mysterious donations from who knows where.
If voters begin to understand that Democrats really are on their side, and will fight back against these shadowy special interests with their hundreds of millions in dollars coming from who knows where, our candidates can win a lot of these close races even with the outside groups outspending them so badly. But they also have to hear loud and clear from Democratic elected officials that they are standing up to these special interests when it matter the most, which brings me to my final point of the day: we need a far clearer and stronger message from the White House on whether they will take on the big banks that have committed foreclosure fraud. So far on this issue as it has emerged over the last couple of weeks, when the White House had to make a choice on policy, the President has mostly done the right thing: his veto of that make-foreclosures-quick-and-easy nightmare of a bill that snuck through Congress in the dead of night was incredibly important. And while I would have chosen to go with a complete foreclosure moratorium, I give the White House a lot of credit for having Gibbs come out yesterday in support of the state AGs in their investigation of this fraud debacle, and in saying these simple but crucial words that probably hit some of these fraudulent bankers like a punch in the guts: "We just want to take the just and necessary steps to ensure that the process is being followed legally." The reason that simple idea is so crucial is that banks and foreclosure mills are desperately moving to try and find ways to get around the inconveniences of the laws on the books so that they can get these foreclosures processed. With the White House vetoing their first attempt to circumvent the law, and saying clearly they are backing AGs in making certain that the law is actually adhered to, it gives the bankers and their foreclosure mills a massive problem.
So that's mostly to the good, and plays into the populist surge that democrats are trying to ride in the final weeks of the campaign. What is terrible is the messaging coming out of Tim Geithner's mouth. Check out this convoluted stuff:
Charlie Rose: You're encouraging banks to declare a moratorium on foreclosures?
Tim Geithner: No, I wouldn't say it that way. I think that you know what you're seeing in housing still now is a national tragedy, still very, very difficult. You know, again, this was a crisis caused by a lot of people were taken advantage of, a lot of people were too optimistic about what they could afford in terms of a house, lot of people were speculating in real estate, and a lot of innocent victims got caught up in the consequences of those basic mistakes. You saw, you know, the nation's largest banks that ran these servicing businesses, not invest anything like what they needed to, to run that business effectively in a downturn like that. And you're seeing the consequences of all those mistakes play out still across the American economy. Now, you've seen some banks suspend temporarily the foreclosure process so they can just make sure that they're not causing any injustice to the borrowers and that's very important for that to happen. And we're going to -
Charlie Rose: So you're pleased to see that happen.
Tim Geithner: I think where that's happening again the suspension is to make sure they're not causing any injustice is very important, but I think it's important to recognize, Charlie, that if you -- a national moratorium would be very damaging to exactly the kind of people we're trying to protect, because the consequence of that would be in neighborhoods that have been most affected by the foreclosure crisis, where you see lots of houses on the block empty, unoccupied, what it means is those communities will be living longer with houses unoccupied, with more pressure on their house price with the people still in their houses. That would be very damaging, and so again we want to make sure we're holding these services accountable, that they're not causing any injustice to people who can afford to stay in their home, and we're going to make sure we're careful in doing that. But we also want to make sure that we're not going to make the problem worse.
Geithner here defends the banks, not only giving them a free pass on the fraud going on the foreclosure market, but actually saying they should get credit for temporarily suspending the foreclosure process "so they can make sure that they're not causing any injustice to the borrowers". Does anyone besides Geithner and the occasional Ayn Rand acolyte believe that these bankers are such moral, salt of the earth types that they care about the injustice being done to mortgage holders? It is this kind of messaging that makes a muddle of what Democrats are trying to do nationwide. The explosion of the mortgage fraud issue gives us our best opportunity yet to re-frame this election around populist economic issues that show Democrats to be fighters for the middle class and against the big banks and other special interests. The White House is on the right track ingoing after the Chamber and Karl Rove's secretive and possibly foreign funding. They are doing the right thing in vetoing that terrible make-illegal-foreclosures-fast-and-easy bill, in backing the AGs, and in backing the rule of law on foreclosure fraud. Now they need to get their messaging right: make it clear, tough, and not in doubt as to being on the side of homeowners against the banks who are trying to rip people off.
Anyone confidently predicting what will happen in this election is full of themselves and will probably be proven wrong: no one knows how this puppy will turn out. The money and voters' anger about the economy could overwhelm the Democrats, especially if they mush up their message. But an anti-special interest, anti-secretive corporate funding message gives us a real chance to make the results different than we thought.
Picking a new head for the National Economic Council is an important moment for the President's rapidly realigning White House staff. It is an opportunity to do two very critical things at once going into the President's crucial final full year before the re-election campaign gets into full swing. The first of these is the most urgent project of this next year: finding some way in this badly damaged economy to start seriously generating some new jobs. The second mission is possibly even more important to the President's re-election and long term political health and legacy: restoring the balance in the Democratic coalition.
Ever since William Jennings Bryan's Cross of Gold speech at the 1896 Democratic convention, after which the populists merged their movement and their party with the Democrats, the political party I am proud to call mine has on economic issues been an uncomfortable coalition of those working-class populists and urban business leaders. Woodrow Wilson was the first Democratic President to govern with this uncomfortable coalition, and he chose fairly evenly between the two. FDR and Truman were more clearly on the populist side, JFK was more in the middle between the two, and LBJ went more with the populists, but all of those Presidents had significant business figures as part of their advisers and political coalition. Carter and Clinton both leaned much more heavily toward the business (increasingly Wall Street) wing of the party but both had more populist progressive advisers as well. Having smart guys like Joe Stiglitz and Bob Reich on the same side as me during those White House policy fights didn't mean we won half the time, but us progressives inside won a few rounds at least.
Flip to the transition period in late 2008. As the economy was on the verge of crashing around us, the President-elect decided to make his bet overwhelmingly with the Wall Street-oriented side of the party, the folks who were proteges and aligned ideologically with Bob Rubin. There were a couple of exceptions (Volcker and Jared Bernstein) but they were relegated to relatively minor positions. I had the sense at the time that Obama felt that he needed to have people who understood the financial sector and industry players really well, and that in a time of crisis he was looking for a team that wouldn't be too torn apart ideologically to make clear quick recommendations. But whatever the reasons, what had become the wing of economic thinkers with a sizable edge in the Clinton years became virtually the only view Obama has heard since he became President. With Tim Geithner's mentor and ideological twin Larry Summers leaving the NEC, now is the time to restore a measure of balance to the President's economic.
The biggest reason that is so important is because of the jobs issue. The macroeconomic Wall Street-oriented guys like Geithner and Summers have never been focused on the specifics of how you produce jobs in the short term- it is just not how they think. Macroeconomists think in terms whether the GDP is going up or down, whether finance is flowing and the banks are healthy. They tend to think, as administration officials used to say ad nauseum until someone in the political team finally got them to stop, that jobs are a lagging indicator that will come back around someday, after the banks get more financially comfortable and start lending again. The problem is that the shock to this economy from the damage done by the financial crisis has made classical macroeconomics a dead-end street. Banks are more comfortable but they are still not lending money because (a) there are a lot of toxic assets still on the books, (b) no one thinks main street businesses will be making money anytime soon, and (c) the Wall Street banks think they can still make more money in speculative trading than in boring investment.
The old economic models are broken, and a little entrepreneurial populism is exactly what is needed right now: someone with fresh ideas re how to spur manufacturing, how to jump-start new industries and companies. You need someone to provide a balance to Geithner's classical macroeconomic thinking, someone who wants to invest in middle class jobs not somewhere in the future when the economy has healed itself a lot more, but now. Right now. The President needs to face the fact that there aren't a lot of creative new ideas coming from the financial macroeconomists and Rubin proteges.
Here's what is also true on the political side: whatever happens, there are few economic thinkers anywhere that believe prosperity and big job gains are right around the corner. We are very likely to still have an economy in the doldrums in the fall of 2012. If Obama stays with the an economic team all drawn from the same crowd as he has now, and they all keep advising him to do the same things he has been trying all along, no one is going to give him any political credit two years from now. He has to be seen as FDR was in 1936: things were still bad, but he was willing to keep trying and trying and trying some more on new ideas to spur the economy, and at least some working class folks- Social Security recipients, WPA workers, etc- had a little bit of money to spend. If Obama brings in a new economic team with some new middle-class jobs-oriented ideas, it will help him immeasurably in terms of keeping voters' patience. The other politically crucial thing it will do is that it will unite his party. The populists in the Democratic coalition- labor, poor people, working class women, immigrant laborers- want to feel like their President is on their side, that he is taking chances and trying new things that will help them economically.
There are a lot of good candidates from the progressive populist wing of the party. A former Senator like Byron Dorgan or Don Riegle or Jon Corzine (in spite of being a former Goldman Sachs guy, Corzine is a serious economist populist). A former labor guy like the brilliant Ron Bloom, who is already in the administration. Lots of good economic writers and thinkers as well. But I know the administration wants to check either the former CEO box or the woman box in terms of their symbolic hirings, so let me throw one choice into the ring that fits one of those two boxes: Leo Hindery. I'll admit some bias, as he is a friend of mine. But the economist I respect as much as any other, Rob Johnson (who would also be a great candidate but doesn't want it), said to me the other day that he thought Leo was the best candidate he could possibly think of, and I have to agree with him. One of the most successful CEOs in the country over the last couple of decades, a great manager, a longtime writer on issues of manufacturing and trade, he would be hard for business leaders to say he wasn't qualified. But Leo is a tried and true populist, a close friend of the labor movement in spite of being a retired CEO. He has great political relationships on Capitol Hill, and a good working relationship with new White House COS Pete Rouse. The only political downside, if you can call it that, is that he has been a critic of White House economic policy, but I think hiring him would show that Obama was open to new ideas.
Leo is not the only good candidate, but hiring him or someone like him, someone who will restore balance to the President's economic team and political coalition, and someone who will walk in the door with a raft of fresh ideas that Geithner and Summers haven't been thinking about, would go a long way in getting the President ready to take on the economic challenges of the next two years. The bottom line for me isn't a particular candidate, it is that the President understands that he, his party and governing coalition, and our country need an NEC head who is not tied to traditional Wall Street-oriented ideas about the economy, or someone from corporate America that isn't bothered by the outsourcing of jobs and the trade deficit. We need an NEC chair who has a track record of caring passionately about manufacturing jobs, our crumbling infrastructure, our trade deficit, and new approaches to creating good paying jobs for middle and working class Americans. Having someone like that to run the NEC to balance Geithner's macroeconomic financial sector orientation at Treasury is crucial to rebuilding our economy, and to rebuilding confidence in this administration that they care about the middle class who has lost so much in the last ten years.
Update: This post was written yesterday before I had the chance to look at the stunning NYTimes story in this morning's paper. Entitled "Cheap Debt for Corporations Fails to Spur Economy", it summarizes better than anything I could write why the classical macro-economic model embraced by the Bob Rubin wing of the Democratic Party is not working in the deeply damaged economy of 2010. The article describes how one major corporation after another is borrowing "vast sums of money for next to nothing- simply because they can", but instead of using that borrowing to invest and create jobs, they are using it to (a) stockpile cash against worries of future weakness in the economy; (b) invest in new technology that allows them to "be more efficient and cut jobs"; (c) lower their next year's tax bill; (d) buy long term bonds (in one case mentioned, a 100 year bond); and (e) finance new mergers and acquisitions.
In case you are keeping track at home, none of those 5 things creates jobs or benefits workers.
The old economic model is fundamentally broken, torn apart by the incredibly deep damage done to this economy by the last decade of erosion of middle class buying power, and the Bush recession and financial market collapse of 2008. We need an NEC head who will bring fresh ideas and a different economic model to the administration.
I have beaten up on the Obama White House enough that I'm no longer very welcome by many of the top staffers there, and on no issue have I been tougher on them than on their policies regarding dealing with the biggest banks and the TARP program. This morning, though, I am all smiles, delighted to my core, because the reports, confirmed multiple times, about the appointment of Elizabeth Warren are a big home run.
I am more than a little biased, because Elizabeth has become a good friend over the past few years, and because I have rarely seen the kinds of guts and tough bargaining strategy that I watched her show during the financial reform fight and the TARP oversight work. She publicly and repeatedly faced down Tim Geithner on a series of major issues around TARP and the overall handling of the financial crisis. She privately went nose to nose with Barney Frank and Chris Dodd and Treasury during negotiations over the financial reform bill. She had to time and again back Dodd down when he was getting ready to make bad compromises on the consumer agency. (Why do you think Dodd has fought so hard to keep Warren from being nominated?) She is the real deal, a fighter for middle class and poor families through and through.
Now, some progressives are arguing this joint appointment to the White House and Treasury is somehow a weak attempt to fool us, that Warren is being given the job as window dressing but will have no real power. The people arguing that just don't know Elizabeth very well, or understand what motivates her. I do not believe for a minute that she would meekly accept a powerless window dressing job, or would put up with it very long if that is what it turned into. She has never been interested in being in government for the sake of a title, and she isn't going to start now. The impressive thing is that I think Obama understands that, too, and gave her the job anyway.
For Elizabeth, the options here were the choice of basically being put on ice for several months at least during an extended confirmation battle, a time where she couldn't speak out or do any actual work on the agency while Geithner was free to start building it any way he wanted; being at Treasury reporting solely to Geithner, who I believe would do everything he could to undermine and disempower her; or this intriguing combination of working with Treasury to craft the agency while also reporting directly to the President. I don't know exactly how this deal went down, but it looks to me like Elizabeth helped craft something that might actually work in her mission to help consumers in dealing with the big banks. She always has the option of walking away if it doesn't- and knowing her, she would have the guts to do just that.
I think this is one time when we can give Obama credit for doing the right thing. Wall Street was determined in its opposition, and establishment insiders like Dodd did everything they could to derail Elizabeth from having any role in creating this agency. But the progressive movement fought like crazy to make this happen, Elizabeth showed her usual savvy and toughness once again, and the President did the right thing.
And here's the deal: this really does matter. I am constantly frustrated by the brain dead politics and corporate oriented policies of many of the people in the Democratic party, but there remain two reasons I still work hard to get Democrats elected. The first is that the Republicans scare the hell out of me with their extremism, but the second is that at least some of the time, Democrats who really care about working people and the poor do get placed in positions of power. Cecilia Munoz being the one to negotiate with Governors over how poor people are treated under government programs in the states matters. Melody Barnes playing a role in the crafting of domestic programs in the federal budget matters. Hilda Solis being in charge of running OSHA matters in terms of workers safety. And Elizabeth Warren being given the job of building an agency to make sure consumers are treated fairly by the big banks who dominate our country's economy is a very big deal.
This is a great day for America's working families, and we should celebrate.
There is so much flak for what seems would be a fine Presidential appointment. The nation's Chief Executive, Barack Obama, is often characterized as Spock, a Vulcan who is almost virtually void of emotion. It is said that our current President is practical. He acts on logic. Yet, this supposed intellectual individual has, at times, seemed ready to do other than what most think reasonable. Mister Obama has not appointed the truly best Sheriff for towns throughout the country, Elizabeth Warren..
But really, going back further, not allowing Republicans to destroy the filibuster back in 2005 is the biggest mistake made by not only President Obama, but by the Democratic trifecta as a whole (and, I admit, my biggest mistake too). This would have resulted in a wide swatch of changes, including a larger stimulus, the Employee Free Choice Act, a better health bill (in all likelihood, one with a public option, and completed in December), an actual climate / energy bill, a second stimulus, and more. If Democrats had tacked on other changes to Senate rules that sped up the process, such as doing away with unanimous consent, ending debating time after cloture is achieved on nominations, eliminating the two days between filing for cloture and voting on cloture, and restricting quorum calls, then virtually every judicial and administration vacancy would already be filled, as well.
Playing the "what if" game can be painful, because there is no way to go back in time and change what happened. However, it is also useful in that it gives us a roadmap on how to do better in the future. In this case, that means focusing our efforts on changing Senate rules for the next Congress. Right now, it is hard to imagine any more important effort in order to achieve more effective governance.
I just got back from a Sunday jog around the White House and monuments. For those who aren't here in DC, it's sunny but windy/chilly.
Listened to the Sunday show podcasts along the way. Some things that caught my ear...
TIM GEITHNER: "You know, I'm -- I'm not an economist, David." Reminds me of Cenk Uygur's typical riff on Star Trek's, "Jim, I'm a doctor, not a [fill in the blank]." Except unlike Dr. McCoy being called on to be a bricklayer, Tim Geithner's "Dammit, I'm a Treasury Secretary -- Not An Economist" when asked about unemployment is a little more unnerving.
BILL CLINTON was asked about Obama pushing "opposite policies of Treasury Secretary Rubin and Summers at that time, do you think in retrospect they gave you bad advice on these issues?" He said, "on derivatives, yeah I think they were wrong and I think I was wrong to take it." Wow. That strikes me as rather big news.
TIM GEITHNER: Previewed the White House talking point if unemployment goes up: "If you see that happen it'll be because you have more people come back into the workforce now because there's hope again." Yay! Hope is on the way!
REP. MARSHA BLACKBURN: Reacting to Gov. Ed Rendell calling Republicans the party of no, she previewed a new 2010 Republican talking point, "We're the party of K-N-O-W." Really? If Frank Luntz wrote that one, he's kinda losing his touch...
DAVID GREGORY asks Blackburn a great question: "What did [the free market] get the American People during...the financial collapse? Is that not a fair question about the limits of -- of the free, capitalist system?" WHOA. When was the last time a Sunday show host for a network owned by a giant corporation questioned an unbridled market? wow...
POLITICO does an amazing job giving Meet The Press an exclusive on a new poll showing that 76% of teabaggers think Obama is a socialist. After that statistic, David Gregory adds, "I -- I should say that that poll from Politico will be available in its entirety on Monday at Politico.com. Speak to that." Ha. PR person's dream...
DAVID GREGORY, on a roll, quotes Michele Bachmann at a teabagger rally saying, "We're on to them. We're on to this gangster government," and then does an unusually good job asking 5 tough questions and follow-up questions to Marsha Blackburn, including "April 19th is coming up...the anniversary of the Oklahoma City Bombing, where an antigovernment person who was arguably a sociopath attacked the federal government. When you describe a gangster government, do you think that's over the line and inappropriate in our political discourse?" He got Blackburn to disown Backmann's words on the 5th try, "It would not have been a choice in words that I made." (Programming note: Rachel Maddows "The McVeigh Tapes" about anti-government militias airs this Monday at 9pm EST on MSNBNC...)
JAKE TAPPER: Was he aware of the irony when asking Bill Clinton, "Explain what a commitment is?"
Did anything else catch your attention on the Sunday shows today?
About 6 months ago, I started warning about the potential for a really bad electoral cycle for the Democrats in the 2010 midterms. I feared that by not taking the big banks on more aggressively, not doing more to create jobs in a really bad economic period for job creation, and letting the health care bill drag on and get too compromised in terms of taking on the insurance industry, that Democrats would be badly hurting ourselves with both our base voter turnout and with swing working class voters getting hammered in this economy. A lot of the Democratic establishment said folks like me were over-hyping, that while it wouldn't be an easy year, there were all kinds of reasons to think it wouldn't be so bad. To my great chagrin, my predictions were proved right with a vengeance in the first three big elections of this cycle in NJ, VA, and MA: base vote turnout was terrible, and working class swing voters turned dramatically against us. Now, the conventional wisdom has turned and just about everybody in the Democratic party is in full scale doomsday mode.
That's why I was so heartened to see David Plouffe's well reasoned analysis piece in the Washington Post on Sunday, laying out a strategy on how the Democrats can survive 2010 without getting slaughtered. Because what is needed now in the Democratic party is that kind of calm, steady thinking. As worried as I have been now for these last 6 months, I am equally convinced that if we do the right things politically and policy-wise (the two are in sync), we can surprise people in the 2010 elections and do a lot better than the pundits and the panickers think.
The reason I believe this is that I have been involved in several elections where good things happened against all the predictions of the conventional wisdom. Let me take you back to some elections in the past where Democrats came back when things looked really dark for them:
The Treasury Department claimed earlier today that the latest scandal surrounding Tim Geithner's sweetheart deals to AIG doesn't matter, because AIG is on track to pay back the loan. Even if it were true, that response is still highly offensive, because it assumes that a few billion dollars of Fed money--rather than, say, a crashed economy and government collusion to protect the people who crashed the economy--is all that made people upset about the bailouts.
But what's more, the Treasury Department's claim that AIG will pay back the full loan is completely false. The New York Fed forgave $25 billion of the loan to take an ownership stake in AIG that meant no actual control. From a letter Representative Alan Grayson sent to Ben Bernanke:
The New York Fed's entire loan was $25 billion. On top of low interest payments, no limits on executive pay, and other sweetheart deals, the New York Fed allowed AIG to be forgiven for 30% of the entire loan for utterly meaningless concessions in return. So, even though the Treasury Department's response to the latest scandal would have been offensive even if it were true, it isn't true at all.
Oh, and here are some more results of Geithner's decision to allow AIG to regulate itself. Most of the bonuses AIG execs promised to give back in order to avoid legislative action were not actually given back (hat-tip reader JD):
When word spread earlier this year that American International Group had paid more than $165 million in retention bonuses at the division that had precipitated the company's downfall, outrage erupted, with employees getting death threats and President Obama urging that every legal avenue be pursued to block the payments.
New York Attorney General Andrew M. Cuomo threatened to publicize the recipients' names, prompting executives at AIG Financial Products to hastily agree to return about $45 million in bonuses by the end of the year.
But as the final days of 2009 tick away, a majority of that money remains unpaid. Only about $19 million has been given back, according to a report by the special inspector general for the government's bailout program.
I am angry about this not just as someone who finds the policies involved abhorrent, and not just as someone who has taken a really big hit because of the Great Recession. I am pissed about all of this as a Democrat. Watching the Obama administration and center-right Democrats in Congress continue to collude with the financial services industry is sickening (even apart from the bailout, check out the outcomes of the mortgage reform, student loan reform, and financial regulation fights). They are pissing away our generational opportunity to really help people, and seriously imperiling the Democratic Party at the ballot box in the process.
As Natasha reminded me earlier today, we worked as hard as we could to put these people in charge, and these are the results we are getting. It turns my stomach. What a waste.
The Federal Reserve Bank of New York, then led by Timothy Geithner, told American International Group Inc. to withhold details from the public about the bailed-out insurer's payments to banks during the depths of the financial crisis, e-mails between the company and its regulator show.
AIG said in a draft of a regulatory filing that the insurer paid banks, which included Goldman Sachs Group Inc. and Societe Generale SA, 100 cents on the dollar for credit-default swaps they bought from the firm. The New York Fed crossed out the reference, according to the e-mails, and AIG excluded the language when the filing was made public on Dec. 24, 2008.
That is bad enough. The Treasury Department's offensive response to these revelations shows just how clueless and pro-Wall Street they actually are (emphasis mine):
The Treasury's response this morning is, essentially, no harm no foul. Meg Reilly, a Treasury spokeswoman, released a statement: "In the transaction at the heart of this dispute... the FRBNY made a loan of $25 billion which is on track to be paid back in full with interest so that taxpayers will be made whole. Somehow that fact that the government's loan is 'above water' gets lost in all the consternation despite its mention on page 2 of the SIG-TARP report (and weekly updates on the FRBNY's web site."
Here is my response to this response, which is hardly the first of its kind around the nation: fuck you. Made whole? Seriously, fuck you. And then fuck you again.
Geithner and the Treasury Department seem to think that the only thing Americans care about in this deal is that AIG pays back their loans. What they care about is that the economy was crashed by people like AIG. What they care about is that these fuckers are not only not being punished for fucking millions of people, but that they are getting deals from the federal government that preserve their bonuses and offer them interest rates no individual American could ever receive.
Tens of millions of Americans are facing crushing debt payments because interest rates on the loans they received are so high. They are losing their jobs. They are losing their homes. They would love to get the kind of help that people like AIG got. Loans with little or no interest would be fantastic. Loans like that could actually be repaid by Americans facing crippling mortgage, college, credit card and other debts.
However, the only people getting deals with loans large enough, and at low enough interest rates, and with direct-possibly illegal--assistance from the government, are the same fuckers who crashed the economy. Those people are being helped by the government. Everyone else is still suffering. It reeks of an unholy alliance between big business and big government designed to frock over everyone else.
Made whole? Fuck you. You just don't fucking get it at all.
A couple of items in the financial sector, but both can be summarized in these words: the powerful and greedy continue to run things with impunity in the financial world.
First there's the news that Goldman Sachs is making record bonus payments for the first half of the year. Let me repeat that: RECORD bonus payments. Bigger than 2004 or 2005 or 2006 or 2007. Bigger than at the height of the bubble. In spite of all the toxic assets they have created. In spite of all the government bailout help. In spite of all the stunning damage to the American and world economy. In spite of all of that (or maybe because of some of it), for the very, very short term, the company has good profit numbers. Ergo post hoc, they are giving out really awesome bonuses to their big enchiladas.
Then, there is the massively infuriating article entitled "Treasury's Got Bill Gross on Speed Dial". It seems that Bill Gross is extremely happy these days. Everybody in government seems to hang on his every word. The plan that he helped develop, the Public-Private Investment Program (the PPIP for short), which would coincidentally make him billions of dollars, is being pushed by Tim Geithner.
Read these two articles back to back; and if you are not sputtering with rage at the end, you must truly be the most pro-corporate libertarian around.
Hey, I know it takes a heck of all ill wind not to blow somebody some good. And I knew that when the Summers-Geithner policy of resuscitation of the financial system rather than restructuring it was adapted, that lots of people would make money off the deal. But reading these two articles really does make you wonder who won the election, and how these greedy folks can get away with doing whatever they want.
Check out this absolutely terrific post by Drew Westen, one I had really wished I had written because it's so on target. I want President Obama to succeed more than I've ever wanted anything politically, but it's not going to happen unless he (a) wrenches the control of the economy away from the greedy, and (b) confronts the greedy directly. You have to decide which side you are on, Mr. President: the struggling tens of millions barely hanging on, or not hanging on at all, in this dreadful economy. Or the greedy bankers and health insurance executives. I trust that you have good values and instincts, and I want to be on your side in these fights. I appreciate the good things you've done so far on the stimulus, the budget, health care, the environment. But at some point, you are going to have to confront the greedy, or you are not going to inspire and you are not going to win.
Fight the good fight, Mr. President, and there will be tens of millions of us who will fight it with you. Avoid these fights, and your Presidency will be adrift, with neither set of allies fighting for you or big legislative victories.
A New Way Forward is doing nationwide video and town hall discussions of the banking issue and overall economic picture the entire week. Tomorrow morning I'll be speaking ona panel on the same topic, with the esteemed Simon Johnson, Nancy Cleeland, and John Taylor. It's at 9 AM in the Rayburn House Office Building, near the Capitol South metro. You can RSVP here and stop by for a good discussion of the overall picture and what we can do about it.
A New Way Forward is hosting a live webstream of a discussion on the banking issue and overall economic picture tonight at 7 PM EST, in NYC, with Leo Hindery, Les Leopold, and Alice Kessler-Harris You can watch by clicking here.
Other events webcasted this week are:
San Francisco, 6/10 at 6:30 PM PST with Ernesto Dal Bo, Doug Rucskoff, Donald Goldmacher at Mechanic Library
New York City, 6/10 at 7 PM EST video screening with Danny Shechter, New Roosevelt Institute, Working Families Party at Le Poisson Rouge
Washington DC, 6/11 at 9 AM EST with Simon Johnson, John Taylor, Nancy Cleeland, and me
As many of you know, I have been involved in getting A New Way Forward off the ground and working to re-organize the banking system. They are kicking off a series of forums and town hall meetings next week for Americans to learn about the crisis and get involved in making the system more decentralized and progressive. The first is Monday, June 8th at 7 PM EST in NYC with my friend Leo Hindery, Les Leopold, and Alice Kessler-Harris. It's at The Tank in NYC, a great non-profit performing arts space where I have one of my most fun and interesting book events, and I'll post the video here. You should go if you are in the city.
If you're in DC, on Thursday June 11th at 9 AM, I'll be doing my part at a discussion right at the heart of it, on Capitol Hill at the Rayburn House Office Building (the Gold Room, Room 2168A). Joining me will be Simon Johnson, Nancy Cleeland, and John Taylor. RSVP here.
You can also organize your own video screening or town hall meeting with their help. On a problem this big, with the banking lobby probably the most powerful in the country, we're only going to make progress if we generate momentum everywhere.
Tim Geithner's "Buy America" tour of China was always more or less a joke, but the "bankers' best friend" almost avoided getting laughed off the stage (mainly because of the legendary Chinese deference to visitors) until a student at China's top university asked Geithner about the safety of Chinese assets in the United States.
In response to a question after his speech, Mr Geithner told the student audience that "Chinese assets are very safe", drawing loud laughter from his student audience.
But how did Geithner summarize his adventures in China for American reporters?
"What I sense is a fair amount of confidence, not just in the basic underlying strength and resilience of the U.S. economy, its dynamism, but in our capacity not just to solve this crisis, get growth back on track, but to go back to living within our means," Geithner said.
And even while China's student elite was laughing down Geithner and his pitiful currency, the official attitude was much grimmer...
Though opinion is divided sharply over the necessity to buy more US treasury bonds, few Chinese would think that the country's vast holdings of US financial assets are secure as long as the dollar's long-term value is in doubt.
A cartoon in the same issue of China Daily is even bleaker... for us.
Snooze on, America!
You won't like what you see, when you finally wake up.
Most of us who have been working on the banking issue from the restructuring side of things (meaning put the big banks into receivership and break them up into smaller components that are no longer too big to fail), including people I know far closer to the administration's economic team than I am, have come to the conclusion that the administration's policy regarding the big Wall Street financial institutions is fairly set for the time being. There are a variety of reasons Obama has chosen this path - the fact that Geithner and Summers really believe it is better to resuscitate the big banks rather than to fundamentally restructure them, the belief (reinforced by the Senate's recent failure on cramdown legislation) by senior administration officials that despite the populist anger among the general public that there is no political will in DC to take on the big banks, the reality that most of the media's shallow interpretation about whether something works is whether the Dow Jones goes up the day the plan is announced. But regardless of the reasons, this is the reality we are living with. Obama has clearly chosen a path, and those of us with a different idea about how to work on these issues have to live with the fact that we have lost the debate, for now, inside the administration. The question now is: what do we restructuring advocates do now?