Obama’s First Year

It’s late January and Scott Brown will be the next senator from Massachusetts, which means it’s time for critical retrospectives on Obama’s first year in office. I’m not going to try my own, but simply point you to two I found worthwhile. One, not surprisingly, is by Ezra Klein, who says this is Obama’s problem:

“Obama’s presidency has tried to show, not tell. He’s not given speeches about how government can work. He’s not tried to change minds about the theoretical possibility of government working. He’s tried to make government work. Winning achievements, not arguments, has been at the center of the administration’s agenda.”

Klein realizes the irony, of course; a president who is doing what we say we want presidents to do–govern–is being stonewalled by a right wing intent on winning the next elections, and sniped at by a left wing for compromising too much and for not scoring enough political points. But, as Klein says, whether the fault is Obama’s, Congress’s, or ours, it’s not working.

The other retrospective is by Nate Silver, who picks up on David Leonhardt‘s insight that Obama’s policies have been “politically partisan and substantively bipartisan”–that is, they are extremely centrist in content (center-right, some would even call health care reform, given how much it depends on private insurers), yet perceived as extremely partisan. In Silver’s words, “what Obama has wound up with is an unpopular, liberal sheen on a relatively centrist agenda.” His advice to the administration:

“The best case is when you can simultaneously achieve both a policy and a political victory. More often, especially given the structural constraints imposed by the Congress, you’ll have to settle for one or the other. But I would be very careful about any course of action which concedes victory to Republicans on both levels. Mistakes were made along the way to health care reform, but you’ve paid the political price for health care: now pass the f—ing thing.

“As for the rest of the policies in your portfolio, take an inventory and figure out which have the votes to pass right now (through reconciliation where prudent), which can’t be passed no matter what, and which could be achieved but will require some expenditure of political capital. And then on the other axis, wargame everything and figure which it would be to your benefit to have an extended public debate about (this would almost always be for political theater rather than policy reasons), which you should put up to vote, but as quickly as possible, and which ought not to see the light of day.”

I think this week has shown at least that the administration has decided that real reform of Wall Street is something that they want an extended public debate about; I don’t think they have the votes to pass it. Now they need Tim Geithner to stick with the team–although, in Geithner’s partial defense, the proposal is pretty vague, and there are disturbing hints that the size component will only cap future growth rather than break up the current big banks.

Some of you know that I initially supported John Edwards in the Democratic primary because I thought he was a progressive dressed up in moderate’s clothing. I didn’t support Obama at first because of the opposite reason: I thought he was a moderate (all that talk about bridging divides and moving beyond partisanship) that many people thought was a progressive. (I don’t blame Obama for this; I think it was more people projecting onto him what they wanted to project.) Obviously Edwards would have been catastrophic; had he won the nomination, the most important person in the country would be John McCain’s doctor.

But I’m not particularly surprised by Obama’s first year. I would have preferred a bigger stimulus, but the one he got was a step in the right direction; I would have preferred a different health care bill, but the one he got (almost) was far better than nothing; and I think he has been far too soft on Wall Street, both during the crisis and after. I don’t like Waxman-Markey (I prefer Cantwell-Collins), but it wouldn’t surprise me if Obama went with it (assuming it could pass the Senate, which is a long shot at this point).

This is basically what we voted for, like it or not.

By James Kwak

66 thoughts on “Obama’s First Year

  1. And i would like a new car and a roof on my house but who’s going to pay for it. Oh yea, that new stimulus program you want will. Do you think the rich people in this country would mind???

  2. Obama’s presidency has tried to show, not tell.

    Is that supposed to be a joke? All the man has shown he knows how to do is talk…

    The “stimulus” was entirely the Congress’s creation, chock full of pork. Similarly for the health care bill, which is largely handouts to whomever has the best lobbyists.

    Meanwhile, he filled his economic team with the likes of Geithner, Summers, and Rubin… So we have had a continuation of the bank-coddling “bailout nation” that started with Bush.

    So far, Obama has done nothing but talk a good game and then sign whatever legislation the Democrats in Congress draft. This counts as trying to “make government work”? Hilarious.

    Maybe yesterday marks a turning point, and this is all about to change. But the whole “Oh poor Obama, blocked at every turn by those evil Republicans” is the stupidest narrative yet.

  3. That’s a fine assessment from James Kwak, who apparently is a pragmatic progressive. I agree, I’m thrilled if I can get 50% of what I want from a politician. My expectations are very low, so I’m often pleasant surprised.

    But there is a whole slew of leftists out there having temper tantrums, even threating not to vote for Dems in the next election cycle. And I really don’t know what to tell them, besides that if they are disappointed now, wait unti Nov. and the GOP retakes Congress.

  4. Just how did Scott Brown get elected? Isn’t it because more people voted for him? Start from there and you will see how much of Klein and your own partisan analysis falls apart.

    Another broad hint: The Nobel peace prize was not an achievement; It was a plastic trophy from a socialist esteem camp.

  5. Brown got elected because he was by far the better candidate. Good candidates win, lousy ones lose. Shame the Dems forgot that.

  6. Those are Cliton’s people btw…This started with Cliton…Glass- Steagall was repealled in 1998. Blame them all and our system of government.

  7. Oh, I feel a little guilty I ratted you out on that contribution James. Maybe others knew anyway??? Don’t feel bad James, my Dad voted for Jesse Jackson before he said the racist remark in New York. I voted for Jerry Brown one year (my first vote ever) because Paul Tsongas couldn’t get on our state’s ballot.

    Someone needs to tell Edwards they got those little umbrellas or little raincoats now or whatever. Or he could do it Clinton style…. Have I sufficiently grossed everyone out yet??? Let me know if not and I’ll update my post later.

  8. – Geithner is probably on his way out. After that speech, we’re likely to see a resignation as soon as the fallout can be politically managed. Not so sure about Summers.

    – We can complain all we want about health care – I side with Howard Dean (it was a bad bill). But I can guarantee you this: If unemployment had peaked at 8% as the Geithner/Paulson/Summers projections insisted, Obama would have gotten the bill passed well before Jan 2010 and probably would have rallied Mass voters (health care would have been dead wood). And make no mistake, the source of this unemployment is clear…


    – I cannot overstate the absolute incompetence of both Obama’s political tactics as well as Treasury/Fed’s monetary policy (and I know that “technically” Treasury doesn’t run monetary policy, but the line between bank/securities regulation and monetary policy is thin when those factors directly influence velocity).

    – Obama will have a hard time living down his choice to re-hire multiple Bush economic appointees who helped start the crisis, then using his bully pulpit to defend the whole “recapitalize the banks, get credit flowing, employment is a lagging indicator” narrative. Then failing to deliver on the most centrist piece of his campaign – a massive national energy infrastructure jobs program. Then putting health care above all other priorities, in the gamble that getting it passed was worth any price.

    – Baseline is urging Obama to go on yet another Quixotic crusade; But if Team Obama allows that crusade to spook the markets, it will kill investment and jobs (again), and THE BANKS KNOW THIS. Remember “Don’t villify us?” The current system is built to give banks this veto.

    If he goes to war on this issue without simultaneously holding up a monetary policy that does not rely on bank lending to keep the money supply and price level stable, he will lose. Maybe a strong Treasury in November 08 might have been able to get some concessions for TARP if they’d had a plan ready to go – but they caved, if indeed Paulson ever wanted that regulation. Then Geithner et al caved in Feb 2009.

    Why did they cave? When the stock market plummets 3% a day, and the economy sheds 700,000 jobs a month, and the Fed remains obsessed with inflation – this gives the banks (who control money velocity, and indirectly asset, prices) a lot of negotiating power.

  9. Also James your boy Ezra Klein was on Rachel Maddow a couple days ago. He did a very good job. I think Ezra actually is very wise and insightful, but his problem is he looks like a college freshman, so maybe it’s hard for people to take him seriously. But actually he’s very knowledgeable and it was nice to see him on TV. I’ll try to post the video in here sometime if it goes up on Youtube.

  10. I agree with Nemo here mostly (although the Republicans were highly obstructionist)…

    Ezra Klein is being deceptive in saying that Obama did not go to bat and talk about Health Care, because Ezra wants to believe that IF ONLY the american public understood it better they would want it. Obama delivered an AMAZING NUMBER of speeches. Spent a heck of a lot of time on air, and sunday morning TV. And he failed. Even with a starting 70% popularity.

    He failed partly because the bill was bad, and partly because he lost tons of credibility/popularity due to failure to meet employment pledges. The public _would_ have forgiven his tragic defense of banks if the plan to rebuild the economy by first rebuilding banks (and “getting credit flowing”) worked. It failed horridly.

    But Obama absolutely talked, and explained. Arguing that he did not is sticking one’s head in the sand.



    • Includes 52 addresses or statements specifically on his health care proposals.
    • He used a TelePrompTer at least 178 times. (Technically, it was 177 ½ . On July 13, 2009, one of the teleprompter screens on the left side of his lectern fell to the ground and broke shortly after he began speaking. So he was left with half a TelePrompTer.)

    • Of which 5 were formal, solo White House Q&A sessions. Four were in prime time. His last one was July 22, 2009. (seen at left)
    • Nearly all of the other press availabilities were joint appearances with foreign leaders at which as few as 1 question was taken by Mr. Obama.
    • Predecessor George W. Bush did 21 news conferences his first year of which 4 were formal, solo White House sessions. Only 1 was in prime time.

    INTERVIEWS: 158.
    • This is a striking number of interviews and far more than any of his recent predecessors in their first year. Ninety of the sessions were TV interviews. Eleven were radio. The rest were newspaper and magazine. The number reflects the White House media strategy that Mr. Obama can best respond to questions in an interview setting.

    • Includes 1 in Strasbourg, France and another in Shanghai, China

  11. “Some of you know that I initially supported John Edwards…”

    James, thank-you for that disclosure as it speaks volumes about your political judgment. I am, however disappointed that you didn’t include any Palin jokes though the one about McCain’s doctor was very clever.

    Tell me with the inevitable shakeup coming in President Obama’s economic team and likely the Fed, do you see an opportunity for yourself or associates e.g. SJ?

  12. Maybe if Team Obama hadn’t defended banks by making projections like this:


    (with stimulus, unemployment peaks at 8% in Q3 of 09, without stimulus it peaks at 9.4% in Q1 of 2010)

    Just maybe they’d have a bit more credibility. The Geithner/Summers plan to get growth by rebuilding bank liquidity not only failed, but failed at a spectacularly high political cost.

    So here’s the short version of the argument:


    “Getting banks to lend” by giving them huge capital infusions and cheap money in order to rebuild velocity by increasing debt load was a doomed long term plan


  13. You guys really have missed the point. Clinton had to negotiate with Republicans; Obama squandered a supermajority in both houses. Glass-Steagall was repealed by a veto-proof bipartisan majority. Given the ferocity of the attack against Bill Clinton by Republicans, we will never know what kind of Democrat he truly was. With Obama, we know now that he was a Republican Trojan Horse, anointed by the corporations and media as the inevitable savior.

    Wake me up when Obama’s actions match his phony-baloney rhetoric.

  14. I haven’t heard anyone in the Obama administration saying this, but it seems that there is a desire to be the “Anti-W”. Thus, we just lived through 8 years of dramatic expansion in executive power, with Congress present merely to rubber-stamp whatever directive came to them from the White House. So, in an effort to do just the opposite, and restore some sense of checks and balances — in other words, to uphold the Constitution rather than just ignore it when it is inconvenient — the new President is allowing Congress to do what it has been mandated to do. The Congress may appear to be dysfunctional and incapable of performing its allotted role, but in truth it merely reflects the electorate.

    Obama’s shortcoming is that he assumes a functional electorate.

  15. I normally wouldn’t post this much in one day, but James has pissed me off with that teaser link “Did Barack Obama Buy Our Book?” so I have to extract my revenge now.

    Hmmm, well Simon I would guess is quite happy and pleased with his MIT stint, at least for the time being or he wouldn’t have been so blunt and frank about some of the administration officials, and made some semi-political statements like he has.

    James, no he wouldn’t help Obama directly other than a couple pompoms and a small contribution. I see maybe Mr. Kwak taking that Law degree and trying his hand at state politics one day, Maybe Assistant to the Massachusetts Attorney General as a stepping stone???

    It’s a crazy world, good peoples of the metropolis.

  16. Obama has done an excellent job of making government work. The only question is for whom?

    1. Government works for the banksters: Taxpayers on the hook for $22 trillion with no accountability and no transparency.

    2. Government works for the insurance companies: A health bill that makes failure to purchase junk insurance a federal crime.

    3. Government works for the military-industrial complex: We’ve got a whole new war.

    4. Government works for authoritarians: None of Bush’s policies on executive powers have been rolled back.

    I don’t know where people get the idea that Obama hasn’t made government work. Screwing the peasants is a feature, not a bug, just as when the oligarchs took over in Russia.

  17. They go from bad to worse. Reagan, Bush, Klingon … what now? The USA has a male model for President, when we need Teddy Roosevelt.

    Unfortunately, the political and economic classes are as narcissistic as Obama with the result being the system is set on ‘Broken’.

    Meanwhile, back at the ranch, the [energy- related] problems are lining up to take runs on the totally unprepared American [and world] public like a pack of hyenas on a herd of rabbits. The Administration has run out of maneuvering room. It can either extend bailouts indefinitely or entertain a systemic finance collapse. It has painted out all other solutions.

    How does this fit with ‘Show, not Tell’?

  18. When you fill your administration with former Clinton and Bush administration members instead of filling it with fresh people with fresh ideas, what do you get? Do you get Clinton II, Clinton-Lite, Clinton w/o the hanky-panky? If we are to believe Greenspan, Bill Clinton gave in to Greenspan’s extortion and jettisoned a lot of his original agenda in order to survive politically. But at what cost? We have the current mess due to Greenspan, Rubin, Summers, and Geithner during Clinton’s term and Greenspan/Bernanke, Paulson, and Geithner during Bush’s term. With Obama, we have Bernanke, Summers, and Geithner in charge. If Paul Volcker weren’t publicly and privately advocating viable economic reform, Obama would not have one decent advisor giving him sound economic policy advice and his administration would be sowing the seeds for a bigger financial crisis to come. This is one of your and Simon’s central arguments. If we are to go by results from previous policy actions, Greenspan, Bernanke, Summers, and Geithner are failures who did not perform their duties well. Volcker was the only Fed chairman who knew what the hell he was doing if judged by his results, but until now, he was not heard by the President. And that is the just the Executive Branch.

    Congress is as messed up as ever. As Jon Stewart points out, the Democrats have an 18 seat majority which the GOP never had during Bush’s tenure and Bush got almost everything he asked for passed even after 2006 with the Democrats in control of Congress with the exception of Social Security privatization.

  19. Brown was elected by people who were furious at Democrats for not providing a public option. Without one, the healthcare plan offers nothing for MA voters–we already have whatever is good in the Senate bill plus more. However, premiums and costs continue to rise. The public option offered a chance to slow increases.

    That’s the facts, as established by actually polling former Obama voters who either swung to Brown or stayed home on election day (which is what a lot of the Dem base did).

  20. Seems like when Obama has been faced with a tough decision, he goes out and makes a speech. That seems to be the extent of it. Sure, a nice speech, but once again, it’s starting to look like all hat, no cattle. on healthcare, Israeli settlements, Guantanamo, reining in the excesses in the financial sector, and on and on.

    A Clinton presidency would have IMO been vastly different so far.

  21. Amid all the talk about “political realities,” absolutely everyone has seemed to forget one other detail: real realities.

    Absent healthcare reform, the U.S. healthcare system will continue the collapse it has already started, and bankrupt the nation.

    Absent financial reform, Wall Street will–not may, will–again implode the financial system and the economy along with it.

    Absent climate change legislation, climate change will accelerate and produce devastating if not ELE consequences.

    These discussions remind me of the boardrooms of many, many companies I have worked for or consulted with, where clear courses of action are shut down simply to avoid turf wars, leading to Chapter 11 or hostile acquisition. The US is on a similar course, headed toward a geopolitical meltdown that will dwarf the financial one.

  22. “Brown was elected by the people who were furious at Democrats for not providing a public option…” Brown himself does not support a public option. So what you’re saying is that voters were so upset over the lack of a public option that they voted for a guy who wasn’t upset over the lack of a public and would never as a Senator support a public option. I don’t believe your argument is valid, it’s just self-serving.
    BTW, Brown as a Mass. State Senator voted FOR the Massachusetts healthcare reform. I think he would also support Obamacare if it were similar to the plan he voted for in Mass.

  23. StatsGuy: “But if Team Obama allows that crusade to spook the markets, it will kill investment and jobs (again), and THE BANKS KNOW THIS. Remember “Don’t villify us?” The current system is built to give banks this veto.”

    Is it a crusade to spook the markets, or are Wall Street banksters using a market slide to spook the Obama admin??

    Remember February last year? The new admin starting to get going and the stock markets huge slide? Was that slide (oversold down to 12 years ago) perhaps partly orchestrated by Wall Street, using the panic to obtain no regulation, abolishing of accounting rules, and other preferential treatment?

    I find the headlines in the news yesterday and today troubling: they almost all state that the markets are down BECAUSE of the Obama plan, reducing the plan to mere bank bashing, and suggesting it would be bad for the econ. recovery.

    If Wall Street continues the sell-off next week, the MSM and the banksters’ lobbyists will kill the plan, before it is even worked out.

  24. I feel like I am watching Jimmy Hendrix’s National Anthem play out as a historical drama. A great nation self destructs. Is that how it felt in Russia? What a terrible time to be young. God help us.

  25. Obama’s first year in office can be characterized as “Long on Hope and Short on Change”. He has proven that he can deliver powerful speeches with nuanced assessment of challenges facing the nation. But he has been a disappointment in eyes of many Americans who voted for him believing he can deliver meaningful reform.

  26. “I initially supported John Edwards…”

    No offense, man, but you need to get your sleazy-lawyer-ometer fixed.

  27. James Kwak: “Obama’s presidency has tried to show, not tell.”

    Nemo: “Is that supposed to be a joke? All the man has shown he knows how to do is talk…”

    Yes. I wonder if Obama is trying to ditch the imperial presidency to the extent that congress is the premier branch of government, to return in that way to the 19th century. Or maybe he believes that congress is the legislative branch, and is leaving the job to them.

  28. “Just maybe they’d have a bit more credibility. The Geithner/Summers plan to get growth by rebuilding bank liquidity not only failed, but failed at a spectacularly high political cost.”

    They had a plan?

    A brief look at economic history would indicate that if you give money to banks after a financial crisis, they hold on to it. Did anybody seriously think this time would be different?

  29. shuffle and jive, my man. do a little soft shoe while the financial aristocracy collect their rents. make cutting remarks about the behavior of your lordly employers.

    we did not elect a president. we elected a court minstrel. but it’s not his fault. _any_ candidate would have wound up in the same position, because that’s just the nature of the office.

  30. It started with Truman, actually who replaced the great Vice-President H. Wallace. Then Nixon in the fall of 1971. Then Carter who deregulated air, rail, transportation, energy. Then came Ronald. Then Clinton who knew what he was doing and still did the wrong things.

    Now. Will Obama show some spine and get himself and everyone else reelected? Or will I be voting for Nader again like I did when Carter & Clinton ran again and the phony Gore first ran?

  31. Exactly! When Obama picked Biden as a running mate, I said, well, if that’s the only blunder he makes, ok.

    Then he picked Clinton (or was this all negotiated and bargained for way before the election, when the Clintons realized they couldn’t buy or finagle their win? please excuse my political paranoia) – and I knew we were doomed.

    Then we saw all essentially all of the people Obama had said would be working with him, fall or get pushed by the wayside, and be replaced by Clintonistas or Bushites.

    Someone stole our Obama….

  32. “This is basically what we voted for, like it or not.”

    No it isn’t.
    And now it’s probably over in terms of major legislation.

    The Republicans have every reason to deny Obama and the Dems anything that even looks like an accomplishment in healthcare, banks or anything else – make them look totally ineffective to their base and the indepenants so they stay home or go Republican.

    The Dems are probably over-reading the Mass. election outcome, and are scaring themselves into being even more irresolute and divided.

    The 60 vote thing in the Senate is gone.

    The Supreme Court decision should have the Republicans in huddles as to how they can best sell themselves to various corporations in a quest to buy themselves back into control in both houses.

    I think the only thing that will have come out of 2008 is not having a corrupt fool as President, and that may well change in three years.

  33. As one Chicago friend said: “It’s as if he is still acting as a Senator, rather than our President.”

    He isn’t leading.

    Bernanke, Geither, Summers, and all the Gold-men (especially Storch – who should be replaced by Elliot Spitzer) need to go. NOW. These guys are all about continuing to blow debt bubbles, and leading us down the road of Japan, so they can continue the game of “phantom wealth” and line the pockets of their bankster buddies.

    Once that is done, Obama needs to prepare the public for the deleveraging of debt that we desperately need so we can start to grow a health real-wealth economy, producing actual goods and services. To soften the blow – he needs to make sure there are safety nets in place. If he fails to do this, the speeding locomotive we’re on will slam into a brick wall – and be far worse.

    BTW – in that deleveraging process, he needs to let Fannie and Freddie bond holders and share holders take the hit, the losses, rather than the taxpayers.

    I doubt we are going to see any of this. Obama hasn’t shown he has the strength to stand up for anything. Nor has he shown he has the ability to comprehend the economic and financial spheres. It is obvious he has been impacted by the loudest and most aggressive players (Timmy-the-tax-cheat and friends), rather than rational experienced analysis.

    In the meantime, I’m making my contingency plans. This decade is going to be tough.

  34. Historical analogue:
    Chester Arthur http://www.whitehouse.gov/about/presidents/ChesterArthur

    “To the indignation of the Stalwart Republicans, the onetime Collector of the Port of New York became, as President, a champion of civil service reform. Public pressure, heightened by the assassination of Garfield, forced an unwieldy Congress to heed the President.”

    The nature of the office can change… if the holder of the office has the guts to make it happen.

  35. I love the President, I hate his timidity and willingness to turn over to his mostly liberal, non-progressive cohorts in Congress an agenda that is both positive and, in many ways, bold and ground-breaking. He seems to be still adjusting to the power that he has, and, is seemingly unwilling to wield it for progressive effect. Quite frankly, I am a bit surprised and pleased at the recent salvo across the bows of those who would support the status quo in finance, but the timing is nearly perfect. The Republicans, although winning in Massachusetts, probably got the message, which is that Brown ran, not as a Republican, but as a populist alternative to the status quo, literally echoing Obama’s strategy in the 2008 campaign. He won. The Republicans, if they want to make further inroads, are going to have to copy Brown, and become a more progressive party open to change. So, when it comes to financial reform, they will find it very difficult to garner support by favoring Wall Street to the detriment of rank and file voters who are viscerally opposed to big banks and corporate interests.

  36. True, but it is still possible for the man to show some leadership/backbone and abide by (or restore) the Constitutional checks and balances.

  37. I think that’s a feeling that many people have now. President Obama is such a classy and intelligent person. Even his father wasn’t in his life but he never uses that as an excuse and he’s done so much with his life. I can’t even imagine how much courage it takes for a black man to run for President, and then to do it, I still find it so amazing. A lot of people support him and many people (and I don’t just mean black people) have so much emotion and altruistic belief invested in this guy. All he has to do is stand up for his beliefs, show CONVICTION in his ideas. I think he would be amazed the dangerous paths his supporters will walk together with him if he just shows shows conviction and sticks to his guns.

    Hey President Obama!!!! We will walk the plank together with you!!! Just stick to your guns man!!!!

  38. Klein is a name associated with a certain ethnicity you dimwit (I’d use stronger words to describe your extreme ignorance but it wouldn’t get past the filter). If a certain political movement tried to violently obliterate your race, use it for medical experiments and use the skin for lampshades you might be obsessed with clearing up the record also.

  39. I thought James was too easy on Obama in his column today, and I think many of the comments over-complicate what’s wrong with Obama. The man is a master politician and orator who’s acted as though he’s been made our king, not elected our President. And he even won a Nobel prize too! How great can one be? The people aren’t as confused and ignorant as our politicians so often believe. Most of all they know when promises are made, especially when they want change that they desperately need. This time the public knew our country is in trouble deep financial trouble, and so are they. Obama was the “great hope”
    who agreed with them and would work hard to repair the damage.
    But we knew we were in trouble when he appointed his insider economic team, and we’ve watched it unfold for a year while he’s been telling us how hard he’s working for us while actually becoming a consummate insider himself. His catering to Wall Street and the insurance and drug industries were among the worst of his broken promises. That’s not at all what we voted for at all!
    Is Mr. Obama hearing us now? I deeply hope so, but I’m not sure his politician’s supreme hubris will permit it!

  40. “Was that slide (oversold down to 12 years ago) perhaps partly orchestrated by Wall Street, using the panic to obtain no regulation, abolishing of accounting rules, and other preferential treatment?”

    Yes… And banks essentially got what they wanted because the administration/Fed had no back-up plan for reflating the money supply, other than to give money and subsidized credit to banks and pretty-please ask them to buy stocks in their short term trading accounts again.

    Now they’re attacking the very dynamic they recreated (sustaining asset prices via short term trading), but they have no backup plan. Unless they show a backup plan, we’ll see another massive dip, followed by a consumer panic and further demand crisis.

    But it’s probably worse, because Mr Summers and Mr Bernanke _wanted_ to keep the existing system intact, because they _believed_ it was a more efficient system at allocating capital than a system which was less dependent on short term credit.

    The better plan would have been to announced regulations to hold credit down using administrative tools while at the same time insisting that the Fed buy enough Federal debt to keep nominal GDP growth projections stable. I assure you, there is _some_ amount of asset purchases that would have achieved this. (And yes this would devalue the dollar, which – as Joe Gagnon argued – is a good thing.)

    INSTEAD, we had the Fed blatantly lying that they could not do anything about deflation expectations until AFTER wall street got everything they wanted. I still have no clue how much of this was Bernanke, vs. other vocal members of the FOMC. (e.g. Mr. Hoenig) And we had Obama putting his personal credibility on the line to defend all of this.

    Now it’s a year later, and the macroeconomic situation is worse, not better. We have 10.2% (or more) unemployment, and inflation is higher (which acts as a tougher constraint on the Fed). This is partly due to changes in the carry trade dynamics.

  41. Given the options we had in the voting booth we had last year, I can only wonder where we would be if we had chosen differently.

  42. Yeah, Ted, but Zuckerman does make the point that Obama didn’t concentrate on the biggest concern of the electorate, which was and is jobs, finance, and (although perhaps somewhat inappropriate given the differences between state-level economics and personal economics) deficits. Brooks, boring though he is, also made some good points in today’s column, mostly about misreading a situation of distrust as a call for massive government intervention. A concentration on increasing the transparency of government and financial institutions and thereby increasing public trust would have gone further towards furthering the cause of real change in many areas including health care reform.

  43. If you give the President Obama the benefit of doubt about being a committed progressive rather than a politico, the question for me is how he converts progressive convictions into a governable consensus?

  44. What brain-dead Pelosi has done here, she’s is so F#*king dumb it’s not even funny.

    Pelosi (and her lily-livered, cowardly, shaking in the closet Democrat pussy colleagues) has in essence, given away all of the villagers’ food (political capital) and sold all the food for a nice piece of shiny gold (health care for all Americans) and now that she has that piece of gold right in her hand, she has decided that she doesn’t want to piss off the villagers too much, but the trader has left the village, and she’s too damned dumb to know it.

  45. But your colleague at NakedCapitalism, Yves Smith, seems convinced that President Obama does NOTHING BUT talk, and Congress makes excuses NOT to govern. I agree with her.

    Ezra Klein is either stupid or liar.

  46. In other words, stay out of the partisan shill business. You seem to be leaning in that direction recently.

    Are they paying you already?

  47. Did you read what Klein had to say in the above link: allow me to paste an excerpt:

    by Ezra Klein – Nazi Ideas

    “I’m with Jane Galt on this one: Not everything the Nazis touched was bad. Hitler was a vegetarian. Volkswagen is a perfectly good car company. Universal health care is a perfectly good idea. Indeed, the Nazis actually did a pretty good job increasing economic growth and improving standards of living …”

  48. Captured. Exactly. So what now? We are in great danger of putting some kind of Hitler into power if we become reactionary. ( A certain woman comes to mind.) What are our options?

  49. Gee, I’m dying to know what your contingency plans are…the best I’ve come up with is to move to Canada.

  50. Obama’s greatest bit this year was the Martha’s Vineyard golf-outing/re-nominate Ben B. during lunch routine. Pretty much summed up what we got in our new Pres…

  51. The money in politics reward stonewalling and avoiding rational compromise. In Votes Money and the Clinton Impeachment , Irvin Morris details how the more unreasonable the Republicans were, the more money they could raise from corporate America. Not much different with Obama especially with Big Insurance, Big Pharma and Big Oil.They’re not principled , they’re not disciplined, they’re in it for the money.

  52. “Obama’s presidency has tried to show, not tell.”

    I’m still scratching my head at that one. The biggest complaint of progressives is that the big stuff hasn’t been dealt with. Obama gives a lot of speeches, but we still have two undeclared wars, a massive military budget, bank bailouts, Fannie and Freddie follies, don’t ask don’t tell, no real health care, no prosecution of banksters for fraud, torture, Gitmo, and assholes in Congress. (Okay, so we’re responsible for that last one.)

    And just when we need another stimulus–no matter how terrible the bill might be–he announces a selective freeze on unimportant stuff. If he wants to save money, stop privatizing war. But that’s not gonna happen because it would piss off too many of Congress’s corporate masters.

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