President Obama On CEO Compensation At Too Big To Fail Banks

Bloomberg today reports President Obama as commenting on the $17 million bonus for Jamie Dimon of JP Morgan Chase and the $9 million bonus for Lloyd Blankfein of Goldman Sachs,

“I know both those guys; they are very savvy businessmen,”


““I, like most of the American people, don’t begrudge people success or wealth. That is part of the free- market system.”

Taken separately, these statements are undeniably true.  But put them together in the context of the Bloomberg story – we have to wait until Friday for the full text of the interview – and the White House has a major public relations disaster on its hands.

Does the president truly not understand that Dimon and Blankfein run banks that are regarded by policymakers and hence by credit markets as “too big to fail”?

This is the antithesis of a free-market system.  Not only were their banks saved by government action in 2008-09 but the overly generous nature of this bailout (details here) means that the playing field is now massively tilted in favor of these banks.  (I put this to Gerry Corrigan of Goldman and Barry Zubrow of JP Morgan when we appeared before the Senate Banking Committee last week; there was no effective rejoinder.)

Not only that, but the incentives for the people running these megabanks is now to take on reckless amounts of risk.  They get the upside (for example, in these compensation packages) and – when the downside materializes – this is belongs to taxpayers and everyone who loses a job.  (See my testimony to the Senate Budget Committee yesterday; there was no disagreement among the witnesses or even across the aisle between Senators on this point.)

Being nice to the biggest banks will not save the midterm elections for the Democrats.  The banks’ campaign contributions will flow increasingly to the Republicans and against any Democrats (and there are precious few) who have fought for real reform.

The president’s only political chance is to take on the too big to fail banks directly and clearly.  He needs to explain where they came from (answer: the Reagan Revolution, gone wrong), how the problem became much worse during the last administration, and how – in credible detail – he will end their reign.

What we have now is not a free market.  It is rather one of the most complete (and awful) instances ever of savvy businessmen capturing a state and the minds of the people who run it.  Is this really what the president seeks to endorse?

By Simon Johnson

104 thoughts on “President Obama On CEO Compensation At Too Big To Fail Banks

  1. Clearly, the president is posturing here. No matter how you read that comment, the president is rationalizing the bonuses received by Blankfein and Dimon—the former being the more nefarious.

    If the president wished to extend the olive branch to the left wing of his party before, that pretty much is out the window now. While I agree with his statements, that doesn’t really help relations with his base.

    As you say, making nice with the banks is not going to help his short-term political scenario

  2. It’s always best to say something nice before your offer criticism; hence our common “yah, but” constructions.

    We’ve got the Yah, now it’s time for the “But. . .”

  3. Come on, now that it’s clear Obama’s only getting one term, he needs to be more careful about office politics. He has to keep his bosses sweet for when he returns from his posting at the Washington office.

  4. Obama is walking a tightwire on so many issues. Republicans and the tea party love to accuse him of being anti-capitalism which they equate to un-american. The free wheeling american banking system was very effective in offloading half the debt of the housing bubble onto foreign countries. Thieves or Geniuses?

  5. If you happen to believe like I do, based on evidence to date, that the man was chosen by the oligarchy to talk change and do nothing (be the anti bush). Then his actions make total sense.

    Both parties are owned by the same people, hence connecting with the base and winning elections is less important than keeping the owners happy. I’m starting to believe his plan all along was to allow the republicans to gain seats so any meaninful reform woud be even more unlikley. Afer all how can someone make so many misteps if it aint being done on purpose.

    If you change the dialog to assume he knows exactly what he’s doing, that there is a reason for it, then the meaning becomes much more clear. Instead of thinking he doesn’t get it, assume he gets it and then determine what is actually happening.

    This analytic strategy has powerful insight!!! You will be very surprised the conclusions that are reached.

  6. In the midst of on-going investigations and allegations of impropriety at these firms generally, these are not the guys you want to be on the record endorsing. Almost as certainly as night follows day, a retraction and clarification will be forthcoming.

    See also the link below re using what sounds like historical-rate rolls to hide losses and roll them into the future on behalf of Greece:

    The real punch line is: As bad as the SEC is in detecting fraud and abuse (pathetic, actually), there is no one, save possibly the Bank of England, that will be able to disentangle these rolls and their role in compounding the crisis in which the EU now finds itself. This is like turbo-charging the accumulation of debt. And, as an example of rent-seeking at the expense of a distressed counterparty, it is worthy of inclusion in a textbook.

  7. I’m sure we’ll find we didn’t read the fine print:

    I know both those guys; they are very savvy businessmen.*
    I, like most of the American people, don’t begrudge people success or wealth. That is part of the free- market system.**

    * For “very savvy businessmen” please substitute “masters of control fraud and ponzi finance.”

    ** Please note that the “free market system” hasn’t functioned since at least September 2008. The bankers’ bonus structure, however, remains unimpaired.

  8. “A slowly sinking generation; a remorseless assault on the identity of many men; the dissolution of families and the collapse of neighborhoods; a thinning veneer of national amity—the social legacies of the Great Recession are still being written, but their breadth and depth are immense. ..We are living through a slow-motion social catastrophe, one that could stain our culture and weaken our nation for many, many years to come. We have a civic—and indeed a moral—responsibility to do everything in our power to stop it now, before it gets even worse.” – How a New Jobless Era Will Transform America by Don Peck, March 2010 Atlantic

    “The president’s only political chance is to take on the too big to fail banks directly and clearly. He needs to explain where they came from (answer: the Reagan Revolution, gone wrong), how the problem became much worse during the last administration, and how – in credible detail – he will end their reign.”


  9. Sad to think Obama’s goal, and that of his handlers, was to become a very prominent footnote in American history. Being elected and feted for 4 years is more than anyone dared hope for. They got in: Mission accomplished.

    He was poorly served by some key people — Geithner and Emanuel most certainly — but a lot of folks up and down the line. Both parties are in full gear for 2012, and it is not clear Obama can rely on the machine’s full support for another term (see the current New Republic, e.g.).

    At any rate, we can all move on and get to the serious business of correcting ungodly excess and capture. The Republic’s strong enough to endure another 2 years of this. But, that just means the correction will be that much more volatile. But it will get done.

  10. The operative word (from your testimony, item #C16) is “well-managed”: “Of course, if this capital flow is well-managed, learning from the lessons of the past 30 years, we have little to fear. But a soft landing seems unlikely because the underlying incentives, for both lenders and borrowers, are structurally flawed.
    I would modify the last line of you post to ask, Is this really what we endorsed when “we” voted in 2008? Wouldn’t suggest that it’s another election cycle of “I told you so…” but I always wondered what then-presidential candidate Obama was suggesting when he came out with his flourish of eloquent sayings (such as the “Change you can believe in…”). Settling for political mediocrity is taking a toll on our system of governance. IMHO, President Obama has been captured by his own sense of hubris and celebrity, some what intellectually dishonest with himself and to the American people – yeah, he did suggest on the campaign trail he was out to save capitalism, but with our taxpaying dollar!?. Some critics charged from the beginning he was an “empty suit” but his exceptional rhetorical skills can even win over some of the best and brightest (the highly informed, if not the most educated).

  11. A conscious capitalist isn’t interested in a free market.
    His only interest is accumulation, by any means necessary.
    “Free market” is a term of folklore that resonates with the unexamined and naive faith of the dispossessed majority. They understand the term as a value, hence their paradoxical defense of it even when it threatens their own economic interests.
    But if it is a value for the masses, for the powerful few it is merely a premise for exploitation. That is partly how they continue to exploit. They can count on our complicity in our own destruction.

  12. When I see that quote, I seriously wonder if Obama is really that stupid, that he doesn’t understand that for decades now, and especially since the Bailout began, what the banks are doing has absolutely nothing to do with “free enterprise”.

    The alternative would be that he’s trying to suck up to the teabaggers or something. I can’t imagine who else he thinks he’s fooling.

    (It’s very clear that while he may be far more book-smart than Bush, his alleged intelligence was all hype where it comes to wisdom or common sense. He’s not even politically competent as a high officeholder. The Peter Principle lives. Same for Emanuel. They’re only any good at campaigning.)

  13. Forecasting is a risky business, but I believe Obama’s “window”,for setting the pace of fundamental change, has passed.

  14. Unfortunately, I’m afraid the problem may not be with the President, but us who actually believed the President represented something he does not. That is, perhaps as Krugman says, he is, “Same as he ever was.”

    I think Obama is a curious creature – someone who has an uncanny ability to reflect the hopes and aspirations of those who want to believe in him. He is like a mirror that shows you what you want, but what he is no one can really know. We only get hints of it from the mixture of statements, formal and otherwise, that escape from him.

    That said, you can only really judge a leader from their policies, and his policies do not bode well. Excluding the fact that he did waste a pretty large amount of political capital championing health care reform (albeit in a pretty fickle way), nothing he has done has really shown a serious progressive agenda and even the simple things like the end of “indefinite detention” elude him (actually, not “elude him”, he frankly is supporting and buttressing the practice).

    That is in fact one of the other curiosities – the vehemence of his opposition in light of his actual actions. You would think that he was Noam Chomsky by the flying off the handle that the right has given over him, but really he has done very little different than G.W. would have. The same was true with President Clinton.

    In fact this is what is so discouraging to progressives like myself – that so called “liberal” presidents can continually march to the right, and thus create a “new normal” of which to judge liberalism by. I mean, for instance, when I was growing up while derided by the right, the idea that we could embrace socialism on a national level was allowed in polite conversation (no, I’m not suggesting it, just noting how far we’ve moved). Moreover someone like George Wallace actually had a chance at becoming president.

    But today to suggest that criminals should be given Miranda Rights has now become controversial.

    Sad really.

  15. 1. Why should the president begrudge anyone success and wealth?

    2. How dare you take that one sentence and claim he’s saying “he’s happy with wall street bonuses”? I don’t begrudge anyone success and wealth but I resent those bonuses because of how they got them?

    3. You are a part of what’s wrong–parsing words to fit your preconceived narrative. Shame on you!

    4. Will you apologize when the entire article appears on Friday and the president takes the bankers to task for those bonuses? I doubt it.

  16. Good commentary.

    One is beginning to get the impression Obama and his appointees are in a rear-guard action shoring up the existing apparatus (particularly as regards the banks’ franchises), so that it can withstand any effort to control the oligopoly (perhaps cartel is a better word) that is finance.

  17. In my mind intelligence and even wisdom have little quarter in politics. I know vastly smarter and even wiser people than me who have bought into one party or another’s dogma and will not be dissuaded by even their lying eyes. Really it is a matter of religion, tribalism, or “Red Sox versus Yankees” and it cares not about truth, logic, or reality. In fact it buttresses itself against those very things.

    Unfortunately this statement is probably equally true in regards to myself. I can only credit myself with being aware of the affliction.

    We live in “The Matrix” of our own making, though certainly not without the help of those who also understand the game and wish to manipulate for their own gain. It is a hard won illusion, one that defines who we are, and is as painful to rid as the memories of those abused as children. We think that it is based on truth, but it is really just what we want to believe.

    That said, the truth exists, and in any choice one path is better than the other, but the support shown for one path over another should not to be assumed to be based on anything less human than the other. That is, even the people who are right, probably aren’t basing their choice on any better basis than the other side. Most of what we believe in is simply the arbitrary luck of what side we decided to ally with at a young age, not a better argument.

  18. I all of use have underestimated just how insulated Obama really is…

    Unless you’re one of the Four Archangels, you don’t have access to the inner sanctum. Just because the guy has a crackberry doesn’t mean he’s really listening to people.

    He’s _monitoring_ people, in the sense a consumate politician monitors poll data. But not listening. Not yet, though there’s still hope.

  19. DakotabornKansan quoted Don Peck:

    “A slowly sinking generation; a remorseless assault on the identity of many men; the dissolution of families and the collapse of neighborhoods; a thinning veneer of national amity—the social legacies of the Great Recession are still being written, but their breadth and depth are immense. ..We are living through a slow-motion social catastrophe, one that could stain our culture and weaken our nation for many, many years to come…”

    This describes subjects addressed in The Fourth Turning.

    “Alas, in our age of professional specialization, one must look outside the academy for works of true originality and breadth. One such is The Fourth Turning by William Strauss and Neil Howe… If they are right, they will take their place among the great American prophets.”

    Boston Globe

  20. “Being nice to the biggest banks will not save the midterm elections for the Democrats. The banks’ campaign contributions will flow increasingly to the Republicans and against any Democrats (and there are precious few) who have fought for real reform.”

    Bank political donations follow momentum indicators, just like technical market timers.

  21. It doesn’t matter. He has chosen his entourage. Republican era presidents were able to think by themselves or had more ability and thus make a difference.

  22. Forecasting is a risky business, but my sense is that Obama’s “window” for setting the pace of fundamental change, has passed.

  23. Forecasting is a risky business, but my sense is that Obama’s “window” for setting the pace of fundamental change, has passed.

  24. I guess he and his advissers are just looking at the effects on campaign contributions that would result from making common sense statements against the looters.

    He’s playing right into the hands of the looters, and the looter party.

    It’s amazing how well this guy is falling into the pattern predicted by cynics.

  25. Well, it is not only the president who is putting his foot in his mouth Simon! You did too in your segment on This American Life with Adam Davidson last month when you said you were wrong to have argued that the US needed to take over several of the biggest banks during the height of the crisis.
    Birds of a feather?

  26. “You would think that he was Noam Chomsky by the flying off the handle that the right has given over him, but really he has done very little different than G.W. would have. The same was true with President Clinton.”
    you are misunderstanding how this works: the “right” attacks him for his left agenda knowing full well he has no left agenda. It is all a charade to keep the masses locked up in their confused little minds that we have 2 parties in anything but form

  27. What no one cares to look into is that this same situation happened in the antebellum period of American History. If anyone is familiar with the Panic of 1873 (or was it 1874) then they would realize that the bankers back then pulled the same ‘sub-prime’ (under a different name) loan deal and then pushed it off onto the black banks (not foreign countries).

    Regulations were put into place to prevent this and then good old Ronald started the great deregulation process which led us to this. (In case you were wondering Eurocitizen, I’m referring to Ronald Reagen.) What a real genius.

  28. These are all very fair and perceptive comments (much more accurate then thos on HuffPost today that mostly excuse Obama’s rationalization of the Wall Street bonuses when he’s not been able to do anything for Main Street). What I see in him is a man who mostly wants things to stay calm while he enjoys the trappings of the Presidency. He avoids “lines in the sand”, deadlines, showdowns and controversy like the plague while urging us to be patient. He’s had many “moments of truth” and sidestepped them all – especially on the banks and healthcare.

  29. Ancient Rome:

    Pre-Republican era (Roman Monarchy)
    Republican era (Roman Republic)
    Post-Republican era (Roman Empire)
    Western Roman Empire

  30. CarolinaGirl,

    I don’t think you have awaken from your slumber yet. There are very few people who can take anything without putting their own spin on things, or without putting the spin that seems “in” on it.

    When Obama first entered office, these two were hesitant to criticize for a couple reasons:
    (a) He hadn’t done anything yet
    (b) He was riding a popular/populist (depending on your viewpoint) tide and to criticize him would mean their blog’s death sentence.

    Now that most of the main stream media sources are starting to turn on Obama, they feel it is safe to come out and start throwing their accusations.

    Don’t get me wrong, I’m not an Obama-apologist, but this kind of “reporting” is what gets under my skin. That and people like Eurocitizen making their blanket accusations without realize what a fraud politics in general is.

    Politicians are bought and sold everyday, the only thing is that it’s a black-box market like OTC Derivatives. There’s no regulation.

  31. Eurocitizen, look into classical liberalism and classical conservatism, at least so far as it goes into American history. The classical liberals and conservatives were rooted in the Ancient Greeks and Romans and so your ideas of ‘republicans’ based upon modern definitions is very much off base.

  32. I’m merely trying to identify the different stages of states. Ancient Rome gives a nice framework for that.

  33. It took me a long time to move from hope to disappointment to fuggedaboutit to benign indifference, but now I’m furious. This is way more than jumping the shark, he’s declared his allegiance to the masters of the greatest swindle in American history.

  34. Indeed:

    “Around 2002 in particular, various investment banks offered complex financial products with which governments could push part of their liabilities into the future,” one insider recalled, adding that Mediterranean countries had snapped up such products.

    Greece’s debt managers agreed a huge deal with the savvy bankers of US investment bank Goldman Sachs at the start of 2002. The deal involved so-called cross-currency swaps in which government debt issued in dollars and yen was swapped for euro debt for a certain period — to be exchanged back into the original currencies at a later date.”

    Obama picked a great time to discover the virtue in investmet bankers.

  35. You said “They’re only good at campaigning”

    Excellent point. After this past November, and especially the election of Scott Brown, the “pivot” became apparent–literally overnight the agneda became about jobs and not healthcare.

    But then who do you bring this message to? Certainly not the extremist left base, they are tone deaf at this point unless you start talking about public options and single payers, etc. The piece of the electorate that is apparently ditching the Obama hopeandchange express in droves is the cherished “independent” voter. Hence, he extolls the virtue of “free enterprise” as nebulous as that is.

    It just appeals to the masses.

  36. 1. The success these CEOs are having is because taxpayers’ money bailed them out (while letting their competitors sink). We bailed them out in the hope that they would allocate capital where it was needed and revitalize the economy, which they are not doing.

    2. Why shouldn’t we think he is happy with those bonuses? What has he done to change them?

    3. Not to parse words or anything, but it is simply foolish to claim these bonuses are a result of a free market (see #1)

    4. I don’t know about anyone else, but I will apologize to Obama if it turns out I was wrong.

  37. The bankers bought the US government fair and square — now they get to enjoy the rewards of property ownership.

    If you wanted a government, you should have bought one of your own.

  38. Republican era… I certainly hope you don’t mean Bush. He had Dick Cheney’s hand so far up his puppet kiester that it was hard to know where he ended and Dick began.

  39. 1. Exactly right, if we had not bailed them out, there would have been no bank for them to be running right now. But you’re arguing specifically. CarolinaGirl, on the other hand, was making a more general argument.

    2. How exactly can he effectively do anything about it without:
    (a) A backbone
    (b) Republicans willing to do anything that won’t score political points by opposing him
    (c) Democrats not corrupting the bill (Republicans would as well if they would do anything besides block it)

    3. It’s also simply foolish to say “well they received bailout money, so there’s no way they legitimately made a profit that could result in a bonus”. I’m not defending the bankers bonuses, I’m just pointing out your own logical fallacies.

    4. I think most decent people would apologize as well, I just don’t see our attack dog, James, doing so.

  40. Emanuel and Geithner made lots of money from banks, and will make much more. They have nothing to lose by being very nice to banks, and everything to gain.

    Their place in history is already secure: Sec of Treasury, Chief of Staff. Their resume is doing great.

    They believe history will go on as before, that the USA is not France, that there will be no revolution. well, history is full of surprises…

  41. So, he personally knows these guys. In other words, they are friends of his, or at least acquaintances that he will admit to in public, and recommend.

    This suggests to me a source to our problem.

    Perhaps the President should recuse himself from decisions regarding these banks.


  42. 4 years of Obama. 4 years of Palin. One has to wonder what will be left of America after that.

    Anybody with brain, money, influence and decency, please create a 3rd party.

  43. JCH: the shareholders are the American People. Goldman, for example, was given enough money to be outright bought by the People.

  44. Obama called them “friends” in other occasions, expressing himself, while being president. This, at the very least is a violation of the presidential reserve. He did the same with Buffet who invested 5 billion in Goldman at the (government determined) bottom of the share value.

    Differently from the American People, Buffet now owns part of Goldman, in spite of the fact the People gave much more. I guess Obama, thinking of this, feels friendlier than ever…

  45. I get the feeling this President – who is by any measure an impressive individual – is simply overwhelmed by the task at hand and doing everything he can to move forward cautiously.

    He fears taking big risks so he takes small calculated ones. He fears upsetting the establishment. Actualy, I think he fears “losing” the establishment.

    It’s almost as if though he’s frightened to use the power that was given to him to enact any meaningful change in any particular area (health care, banking reform etc.)

    Of course my biggest fear is that Obama actually knows he’s doing the wrong things but the system is so broken that he’s powerless to do anything about it.


  46. Obama indeed warrants much criticism, but let’s not forget to ask: would the situation in the U.S. be any better had McCain/Palin won the election (which would mean, probably, also a much stronger GOP presence in Congress)? The greatest onus for the mess we’re in still rests on the cynical negativism and obstructionism of the GOP and its “populist” noise-makers determined to destroy Obama regardless of the consequences. And with regard to the stimulus which Congress did pass early in 2009, although it might not have been big enough or done exactly what was hoped, what would be the situation today had it not passed? I never expected miracles from Obama, but am glad that if for nothing else, he’s there to make judicial appointments (which is why the “re”-election of Bush is 2004 remains such a long-lasting tragedy: Roberts and Alito!).

  47. “Why should the president begrudge anyone success and wealth?”

    Uh, because they got their wealth by stealing it from the rest of us?

  48. Uh, without government’s intervention, the shareholders would have been holding stock certificates worth $0.

  49. Then it is true that sub-prime mess is a once in 100 years phenomenon (1874 – 2005) as claimed by bankers!! So per bankers, do not expect another great depression before 2035!!

  50. probably as it’s business practice of sharing the information with other groups, GS would have made a killing on greece’s CDS also..

  51. “The greatest onus for the mess we’re in still rests on the cynical negativism and obstructionism of the GOP”

    That obstruction was irrelevant when the Democrats had a supermajority. Unfortunately they wasted that year trying to craft a health care coverage bill that would please Olympia Snowe–and they have no one to blame for themselves.

  52. Ian,
    The bigger picture can be a refreshing change of scene.
    My comment on Krugman’s “America is Not Yet Lost” re Senate dysfunction:

    “So the Senate is no longer a gentlemen’s club; the warlords have taken over and used the gentlemen’s own rules to trash the gentlemen. Good-bye empire.

    “But I’m just wondering: is this particular kind of opportunism by opportunists really new in American history? The naivete of the founders, thinking factionalism would go away if they frowned sternly enough at it, has always left our government wide open to committed power grabbers. The Jacksonians, for example, considered their ungentlemanliness a point of pride; it’s hard to believe they would have respected such silly rules as the Senate’s when there was money to be made.

    “Parliamentary systems, which take faction for granted, do not aim for disinterested nobility but seem to work better.”

  53. scathew wrote: February 10, 2010 at 10:10 am

    ‘Unfortunately, I’m afraid the problem may not be with the President, but us who actually believed the President represented something he does not. That is, perhaps as Krugman says, he is, “Same as he ever was.”

    Paul Krugman wrote February 10, 2010, 10:59 AM: Clueless

    “I’m with Simon Johnson here: how is it possible, at this late date, for Obama to be this clueless?”

    Douglas Adams wrote:

    “He attacked everything in life with a mix of extraordinary genius and naive incompetence, and it was often difficult to tell which was which.”

    (1952 – 2001)

  54. So the choices are clueless (incompetent) or corrupt? Why do I feel like I’ve come to this fork in the road many times in the last 9 years? Oh well, as Yogi Berra said: “when you come to a fork in the road, take it.” But then again as a nonconformist I prefer to traverse the road least traveled, especially since those two roads have ended up going nowhere in the past.

  55. Wrong.
    Obama is a radical socialist.
    I heard Newt say that last night on Jon Stewart.

    When has Newt ever been wrong?

  56. Part of Obama’s problems stem from the constant drumbeat of slurs, disinformation and disingenous framing of his policies by the Republicans and passed through to the public, unquestioned, by the “news” and punditry on the television. Since most people get the bulk of their information about politics and the president’s policies from television, the medium can help elect a president as well as destroy him by not calling out the duplicitous statements and political maneuvering of his opponents.

    Many of the rest of his problems are self-inflicted. He has an economic team that is advising him to leave in charge of the economic “recovery” the same people who caused the nightmare that everyone but them and other multi-millionaires are living through. The good that the stimulus has done for saving states and jobs he has failed to shout from the rooftops, and instead let his political enemies define the package as useless and pork-laden, vote against it, and still return to their districts and take credit for the largess. His administration’s handling of the Christmas underwear bomber is not being defended as constitutional and apropos, but his enemies are allowed to state to television pundits things about the situation that are patently false: Richard Reid, the shoe bomber, was treated the same way by Bush, but that’s because he was a U.S. citizen (not true – he is a British citizen). No one in the vast wasteland that is television punditry, or newscasting, or even been interviewed by one of these clowns, has even brought up the fact that the rights guaranteed by the constitution are applicable to anyone, regardless of their citizenship, who is accused of a crime in the United States.

    We have an ignorant populace, egged on by emotional and venal charlatans, a two-party system whose leaders bought and intimidated by the same special interests, and a president who avoids confrontation and instead insists on seeking an impossible “bipartisanship.”

    We are in a sea of troubles with no lifeline.

  57. Do [b]you[/b] even know what socialism is? Or is Newt Gingrich right whether or not you understand him?

  58. “More than any other time in history, mankind faces a crossroads.

    One path leads to despair and utter hopelessness. The other, to total extinction. Let us pray we have the wisdom to choose correctly.”

    Woody Allen (1935 – ), My Speech to the Graduates

  59. I agree that BHO is afraid to make any changes ‘lest they actually occur.

    Sometimes people say the opposite of what they mean. In Obama’s case, I think he used the word ‘Change’ to mean ‘let things stay exactly as they are with small changes only’. Just my opinion.

  60. I agree with you, Anonymous, despite the risk.

    It was never the case after Obama’s election that a measured, moderate pace was the wise procedure. Our crisis required decisive & prompt address.

    Obama misreads the support he aroused that propelled him into office.
    He misunderstands the extent of distress in the American middle class — where nearly all of us live.
    And he will find that it’s too late to change.

  61. “He enjoys the trappings of the Presidency.” Oh yes, Kenneth. Immensely.

    But in his very enjoyment of the Presidency during a crisis like this he’s living in a Fool’s Paradise.

  62. As an American taxpayer, I’m concerned with them paying me back plus the agreed upon rate and means of return. As long as their shareholders are okay with the bonus they make while doing that, I’m fine with it. Bonus – shareholders’ business. Paying back the taxpayer – my business.

    We bailed out the economy. All members of the economy, including the unemployed and the bankrupt, benefitted from our doing that – including Goldman Sachs. I benefitted. Okay? That does not give you a right to stick your nose where it does not belong.

  63. So the AIG bonuses are my business. Taxpayers are shareholders in AIG. We, as taxpayers, are not shareholders in GS and JPM. We would be thugs if we interfered in a way which damaged their shareholders, and they would be right to sue us for sticking our noses where they did not belong.

    Obama gets it. SJ – not so much.

  64. Yes, he chose his entourage. Our national mannequin spokesman has acheived his dream, he is now a happy member of the elite and is enjoying all of the priviledges and powers that come with it. Now that he runs with the elite crowd he gets to take part in beating up his old buddies.

  65. “take on the too big to fail banks directly and clearly”

    Get real, the guy works for them!

  66. ” President Obama has been captured by his own sense of hubris and celebrity”

    Only if he’s truly stupid, and I don’t think he is. He’s just the latest spokesman for the elite.

  67. He is walking a tightwire by choice. He could simply fight for what he believes. Wait a minute, that is for everyone to love him, so I guess he is fighting for what he believes.

  68. Obama’s troubles are of his own making. His opponents are morons. A straight-talker with an iron backbone and his intelligence could have defeated them easily.

  69. Certainly, the only really consistent, coherent ‘logic’ displayed by the GOP nowadays is that of IDENTITY; it really is the only way to make sense of statements like ‘keep the Gov’t out of my medicare’, of people with their teeth clamped firmly on the Federal teat demanding that Gov’t get off their backs. But they’re the real Americans.
    Nor are they the only sinners, only by far the worst; pundits wedded to narratives overtaken by events, articles of faith advanced as self-evident facts,thought free pre-programmed responses far less ‘appropriate’ than the Terminator’s…
    The best, but certainly not foolproof, corrective is the study of history, particularly ideological history. Americans don’t do that much of it.

  70. Do you want to hedge your bets on Greece will be “bailed out” by Germany/France…news at 11.

    It was pointed out by one of the foreign correspondents that while Europe has their central currency of the euro, there lacks the fiscal policy for member nations.

    I also learned that our friends, CDS and CDOs have been around since the mid-1995s, not the more recent media awareness in 2008….

  71. That’s just the problem. He is the president of all of the American people, not just his base. So much for post-partisan and a new way of doing things. I will give him big props for ratcheting up the same old same old politics to a new level of ruthlessness, though. I’ve lost count of how many times he or his people have emitted Doublespeak and expected us to swallow it.

  72. RCP/Flashback: Obama Says Bonuses Are Violation Of “Our Fundamental Values:

    Remember .. Obama is the “smartest president ever” .. or so sayeth Michael Bechloss (on the Don Imus show).

    If Bechloss is correct, then Obama knows exactly what he is endorsing. If he is not, then maybe Simon Johnson should be asking: “Is this what the American people were endorsing when they voted for this guy, Obama?”

  73. SteveK9:”Obama’s troubles are of his own making. His opponents are morons. A straight-talker with an iron backbone and his intelligence could have defeated them easily.”

    Very true. He didn’t defeat them because deep down he doesn’t want to. They’re on the same side, they just pretend to be opponents. Obama knows that on the banking issue he has the whole population behind him. Even the tea-baggers hate the bailouts. That’s the right and the left united on one issue. And he won’t make use of that. Instead he tries more or less subtly to defend the bonuses. What a weasel!

  74. Everyone knows how intelligent Obama is. I just don’t think he’s very smart.

    Which makes me think about a story about one of those old con men who used to sell medicine out of the back of a covered wagon. At one point the old con man started bottling those little rabbit pellets, (aka rabbit $hit) & labeled them “smart pills” to make one smart. One day one of his customers told the old con man that those “smart pills” tasted like rabbit $hit. The con man replied, “see now you’re getting smart.”

    Maybe Obama needs to eat some rabbit $hit. He sure ain’t very smart right now. He definetly has some kind of problem. Comparing banksters to pro athletes? How stupid is that?

  75. I agree. I’ve moved my money to a local bank. And I will do everything I can to disassociate myself and my business dealings from the perpetrators of today’s crisis. I’m tired of the ‘realities of the market economy’ precluding action that serve the common taxpayer.

    When the system has us funding a sham recognized by most taxpayers as a sham, what sort of society are we colluding in? I pay my taxes and I vote. Yet, when the collective incentives of those voted into office are unduly distorted by their personal rewards (c.f., recent Supreme Court decision re campaign contributions) I must question the system and those who choose to defend the system.

    The President, of course, has the option to ‘play it safe’ and ruffle some feathers without actual change. But when a successful Presidential campaign has been based on a premise of real change in the context of a system that has devastated countless taxpayers’ lives and livelihoods, not delivering the goods constitutes a serious breach of contract and grounds for voters seeking hope elsewhere.

    The rhetoric about hope appears to have been rhetoric for personal gain (ahh, a friend of the Supreme Court as well?) rather than a promise to the American people. How much more cynical can politics get?

    “Stay tuned…”


  76. Our money – our rules. GS et al don’t like it, they can pound sand or be nationalized.

    My complaint is that the terms of the bailouts were a joke, but I don’t blame the infestment banks for that.

    I blame the Bush and Obama Administrations and the Fed.

  77. Except that the Obamacare plan DOES cut money out of Medicare. Those old people protesting were right, and you’re the one clinging to an evidence-free narrative about what they believe–and you believe it because of your own hatreds.

    But, I should save my breath.

  78. I agree with what you’ve said. In fact it goes to one of my theories that the whole thing is scripted by the oligarchy to slowly move things right. The democrtas can claim a victory forthe people while all the while advancing the oligrachy’s adgenda.

    The key thing to realize is that we in fact have one party rule, but perhaps vote between two factions of that party. Those we have the chance to vote for (republican or democrat)are in fact determined by the same people. It’s just like haveing an election in a one party state, except we have decided to embrace the fiction that there are are parties. This allows the illusion of democracy to be maintained, keeps the masses from rioting and taking the wealth back that has been stolen form them, and allows the ruling class to maintain perpetual control.

    I’m an independent, but get the tea party and the progressives. You can see how the corporate right is doing everything they can to claim ownership of the tea party movement when in fact the movement is really anti established interests. The same goes for progressives. Both see the problem as the same, “corporate, establishment, corruption” that has highjacked the system. The difference is that their solutions are different. Tea party folks believe the government will always be corrupted hence kill the beast. Progressives believe the system can be reformed.

    Both movements should be more united. While their solutions may not match they do at least recognize the problem. Our current party structure won’t allow the real problem to be discussed.

    I saw an interview with Ron Paul and Michael Moore. In fact they both said almost the same thing, but their solutions to the problems were different. If the dialog is so controlled you can’t discuss what the real problem is how can you find a solution?

  79. You mean like: golfing last summer in Martha’s Vineyard, but taking the time during the turn to re-nominate Ben Bern?

  80. Darwin and we should not be pleased. As consideration for the heavenly selectman’s theory of capital – you will be rich but others may suffer – capital theology includes the doctrine of “creative destruction.” That liturgical device was meant to strengthen the capital species, a cautionary sword over their ventures to make them strong while muting what otherwise would be havoc of unbridled greed without consequence. Now that government by, for, and of the large banks has removed the species strengthening environmental challenge of creative destruction, the perverse Darwinian result will be institutions unable to adapt and destined for extinction. That would be fine if they were not taking us to oblivion with them. The lack of courage and foresight over the past 30 years or so in modern politics and capital management is remarkable and may be the hallmark of a society in decline.

  81. Actually, we (taxpayers) are guarantors of GS, MS, JP, …, all those folks that relied on all of the Fed’s liquidity and credit-support programs, along with those of the FDIC that allowed these firms to issue debt. Without this massive and unprecedented support, these “banks” — and I use the term loosely — could not continue to fund their businesses and remain ongoing concerns. Surely, someone as financially savvy as yourself, can appreciate these finer points of public-sector finance. In the real world, the one who guarantees the debt calls the shots.

    Here you go, Sparky:

    We’ll wait while you become familiar with the material.

  82. Why would progressive ever think Obama would be any different than any other mainstream Democrat. The Obama’s and Clinton’s are smart people, but they are very much apart of the liberal wing of the corporate class. Look at the people surrounding him. We can forget about any real change in health care, we are likely to continue spending lots of money on wars we should never have entered into; and the job situation and forclosures will not improve until the corporate class, again increases it’s wealth, not through tax cuts, but the largess of the corporate state. Obama is destined to be a one term president and a major dissapointment. His presidency was one in a life time opportunity and it is beginning given way to the lunatics on the right.

  83. Some time ago I read a report of a comment by one of the few Republicans who had had the chance to know Obama relatively well before the election. This guy said you have to remember two things about Obama. First, he has zero understanding of economics. Two, once he makes up his mind on an issue he virtually never changes it. Could be a pretty damaging combination.

  84. I am reminded of a line in the original Manchurian Candidate movie. “You could not be doing the United States more harm than if you were a paid Soviet agent”.

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