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Bad Report Card Haunts Democrats At Mid-Terms

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It doesn’t take much time or effort to find out how or why the Democrats have alienated so many independent voters (and so much of their own base) during the 2010 election cycle.  You don’t need to look to the Fox News or Andrew Breitbart for an explanation.   Reading through the opinion pages of The New York Times should provide you with a good understanding of what the Democrats have been doing wrong.

One common theme voiced by many critics of the Obama administration has been its lack of interest in prosecuting those responsible for causing the financial crisis.  Don’t hold your breath waiting for Attorney General Eric Hold-harmless to initiate any criminal proceedings against such noteworthy individuals as Countrywide’s Angelo Mozilo or Dick Fuld of Lehman Brothers.  On October 23, Frank Rich of The New York Times mentioned both of those individuals while lamenting the administration’s failure to prosecute the “financial crimes that devastated the nation”:

The Obama administration seems not to have a prosecutorial gene.   It’s shy about calling a fraud a fraud when it occurs in high finance.
*   *   *
Since Obama has neither aggressively pursued the crash’s con men nor compellingly explained how they gamed the system, he sometimes looks as if he’s fronting for the industry even if he’s not.

The special treatment afforded to the perpetrators of the frauds that helped create the financial crisis wasn’t the only gift to Wall Street from the Democratically-controlled White House, Senate and Congress.  The financial “reform” bill was so badly compromised (by the Administration and Senate Democrats, themselves) as it worked its way through the legislative process, that it is now commonly regarded as nothing more than a hoax.  Frank Rich finds it ironic that the voters are about to return power to “those who greased the skids” to facilitate the financial catastrophe:

We can blame much of this turn of events on the deep pockets of oil billionaires like the Koch brothers and on the Supreme Court’s Citizens United decision, which freed corporations to try to buy any election they choose.  But the Obama White House is hardly innocent.  Its failure to hold the bust’s malefactors accountable has helped turn what should have been a clear-cut choice on Nov. 2 into a blurry contest between the party of big corporations and the party of business as usual.

David Weidner of MarketWatch recently discussed the idea of appointing a special prosecutor to bring the Wall Street culprits to justice.  After acknowledging the often-used pushback argument made by those opposed to such a prosecutorial effort — that those cases are impossibly difficult to advance through the legal system — Weidner made this observation:

These cases may be difficult, but they’re not impossible.  And given the creation of a lawless marketplace where one economy-destroying decision can be made on top of another for short-term personal gains, something has to be done.

But nothing’s happening.  Maybe it’s because of the money Wall Street lavishes on Congress.  Perhaps it’s the close ties between the industry and the administration.   It could be, as Nouriel Roubini said in the new documentary “Inside Job,” investigators are “afraid” of what they will find.

A special prosecutor, in a bid to make a name for himself or herself, might be immune to such pressure.   It’s our best hope for outing the scoundrels and creating an industry where greed finally takes a backseat to the law.

Back at The New York Times, Charles Blow brought our attention to the recent rant by Attorney General Eric Hold-harmless, who – despite his uselessness in the aftermath of the financial Ponzi-crisis – stands at the ready to prosecute marijuana smokers in the event that Proposition 19 becomes law in The Golden State.  One would think that the Obama administration might prefer that a large bloc of voters should remain stoned for as long as possible, so as to prevent those citizens from realizing what a lousy job their President is doing for them.  Worse yet, Charles Blow explained how the Democrats have been advancing the Clinton-era Byrne Formula Grant Program, as a vehicle for financing a war on pot smokers, over the objections of former President George W. Bush and conservative groups, who emphasized that the program “has proved to be an ineffective and inefficient use of resources.”  Nevertheless, the Democrats were able to direct two billion dollars from the financial stimulus program to the so-called Byrne Grants.  Remember: that’s two billion dollars from the American Recovery and Reinvestment Act of 2009 – which was supposed to put people back to work and save the economy – misappropriated to the effort of putting pot smokers in jail.  I guess that the Obama Justice Department has to look like it’s doing something.

Another issue that has not escaped the public’s radar – despite the efforts of the Obama administration – is the never-ending catastrophe in the Gulf of Corexit, caused by the Deepwater Horizon oil rig blowout.  Washington’s Blog recently featured an important posting, with links to several articles about this environmental disaster, which the administration wants you to forget about (at least until after the election).  The BP-sponsored, mainstream media seem more than happy with the claim of  “mission accomplished” voiced by Coast Guard Rear Admiral Paul Zukunft (the man in charge of the federal response) and his top science adviser, Steve Lehmann.   A review of any one of the articles linked at the Washington’s Blog posting will scare the hell out of you — just in time for Halloween (and Election Day).  Nevertheless the people who will get the worst haunting of Halloween 2010 will be the Democrats.  Unfortunately for us, most of them deserve it.


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Where Obama Went Wrong

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September 27, 2010

One could write an 800-page book on this subject.  During the past week, we’ve been bombarded with explanations from across the political spectrum, concerning how President Obama has gone from wildly-popular cult hero to radioactive force on the 2010 campaign trail.  For many Democrats facing re-election bids in November, the presence of Obama at one of their campaign rallies could be reminiscent of the appearance of William Macy’s character from the movie, The Cooler.  Wikipedia’s discussion of the film provided this definition:

In gambling parlance, a “cooler” is an unlucky individual whose presence at the tables results in a streak of bad luck for the other players.

Barack Obama was elected on a wave of emotion, under the banners of  “Hope” and “Change”.  These days, the emotion consensus has turned against Obama as voters feel more hopeless as a result of Obama’s failure to change anything.  His ardent supporters feel as though they have been duped.  Instead of having been tricked into voting for a “secret Muslim”, they feel they have elected a “secret Republican”.  At the Salon.com website, Glenn Greenwald has documented no less than fifteen examples of Obama’s continuation of the policies of George W. Bush, in breach of his own campaign promises.

One key area of well-deserved outrage against President Obama’s performance concerns the economy.  The disappointment about this issue was widely articulated in December of 2009, as I pointed out here.  At that time, Matt Taibbi had written an essay for Rolling Stone entitled, “Obama’s Big Sellout”, which inspired such commentators as Edward Harrison of Credit Writedowns to write this and this.  Beyond the justified criticism, polling by Pew Research has revealed that 46% of Democrats and 50% of Republicans incorrectly believe that the TARP bank bailout was signed into law by Barack Obama rather than George W. Bush.  President Obama invited this confusion with his nomination of “Turbo” Tim Geithner to the position of Treasury Secretary.  As President of the Federal Reserve of New York, Geithner oversaw the $13 billion gift Goldman Sachs received by way of Maiden Lane III.

The emotional battleground of the 2010 elections provided some fun for conservative pundit, Peggy Noonan this week as a result of the highly-publicized moment at the CNBC town hall meeting on September 20.  Velma Hart’s question to the President was emblematic of the plight experienced by many 2008 Obama supporters.  Noonan’s article, “The Enraged vs. The Exhausted” characterized the 2010 elections as a battle between those two emotional factions.  The “Velma Moment” exposed Obama’s political vulnerability as an aloof leader, lacking the ability to emotionally connect with his supporters:

The president looked relieved when she stood.  Perhaps he thought she might lob a sympathetic question that would allow him to hit a reply out of the park.  Instead, and in the nicest possible way, Velma Hart lobbed a hand grenade.

“I’m a mother. I’m a wife.  I’m an American veteran, and I’m one of your middle-class Americans.  And quite frankly I’m exhausted.  I’m exhausted of defending you, defending your administration, defending the mantle of change that I voted for, and deeply disappointed with where we are.”  She said, “The financial recession has taken an enormous toll on my family.”  She said, “My husband and I have joked for years that we thought we were well beyond the hot-dogs-and-beans era of our lives.  But, quite frankly, it is starting to knock on our door and ring true that that might be where we are headed.”

What a testimony.  And this is the president’s base.  He got that look public figures adopt when they know they just took one right in the chops on national TV and cannot show their dismay.  He could have responded with an engagement and conviction equal to the moment.  But this was our president  — calm, detached, even-keeled to the point of insensate.  He offered a recital of his administration’s achievements: tuition assistance, health care.  It seemed so off point.  Like his first two years.

Kirsten Powers of The Daily Beast provided the best analysis of how the “Velma Moment” illustrated Obama’s lack of empathy.  Where Bill Clinton is The Sorcerer, Barack Obama is The Apprentice:

Does Barack Obama suffer from an “empathy deficit?” Ironically, it was Obama who used the phrase in a 2008 speech when he diagnosed the United States as suffering from the disorder.  In a plea for unity, candidate Obama said lack of empathy was “the essential deficit that exists in this country.”  He defined it as “an inability to recognize ourselves in one another; to understand that we are our brother’s keeper; we are our sister’s keeper; that, in the words of Dr. King, we are all tied together in a single garment of destiny.”

*   *   *

And at a 2008 rally in Westerville, Ohio, Obama said, “One of the values that I think men in particular have to pass on is the value of empathy.  Not sympathy, empathy.  And what that means is standing in somebody else’s shoes, being able to look through their eyes.  You know, sometimes we get so caught up in ‘us’ that it’s hard to see that there are other people and that your behavior has an impact on them.”

Yes, President Obama, sometimes that does happen.  Take a look in the mirror.  Nothing brought this problem into relief like the two Obama supporters who confronted the president at a recent town hall meeting expressing total despair over their economic situation and hopelessness about the future.  Rather than expressing empathy, Obama seemed annoyed and proceeded with one of his unhelpful lectures.

*   *   *

One former Emoter-in-Chief, Bill Clinton, told Politico last week, “[Obama’s] being criticized for being too disengaged, for not caring.  So he needs to turn into it.  I may be one of the few people that think it’s not bad that that lady said she was getting tired of defending him.  He needs to hear it.  You need to hear. Embrace people’s anger, including their disappointment at you.  And just ask ‘em to not let the anger cloud their judgment.  Let it concentrate their judgment.  And then make your case.”

Then the kicker:  “[Obama has] got to realize that, in the end, it’s not about him. It’s about the American people, and they’re hurting.”

The American people are hurting because their President sold them out immediately after he was elected.  When faced with the choice of bailing out the zombie banks or putting those banks through temporary receivership (the “Swedish approach” – wherein the bank shareholders and bondholders would take financial “haircuts”) Obama chose to bail out the banks at taxpayer expense.  So here we are  . . .  in a Japanese-style “lost decade”.  In case you don’t remember the debate from early 2009 – peruse this February 10, 2009 posting from the Calculated Risk website.  After reading that, try not to cry after looking at this recent piece by Barry Ritholtz of The Big Picture entitled, “We Should Have Gone Swedish  . . .” :

The result of the Swedish method?  They spent 4% of GDP ($18.3 billion in today’s dollars), to rescue their banks.  That is far less than the $trillions we have spent — somewhere between 15-20% of GDP.

Final cost to the Swedes?  Less than 2% of G.D.P.  (Some officials believe it was closer to zero, depending on how certain rates of return are calculated).

In the US, the final tally is years away from being calculated — and its likely to be many times what Sweden paid in GDP % terms.

It has become apparent that the story of  “Where Obama Went Wrong” began during the first month of his Presidency.  Whoever undertakes the task of writing that book will be busy for a long time.




Disappointer-In-Chief Keeps On Disappointing

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September 20, 2010

Many prognosticators have voiced their expectations that disappointment in the Obama Presidency will destroy the campaigns of Democratic candidates in the 2010 elections.  The rationale is that disappointed former supporters of Obama will be feeling too apathetic to vote in November, while the energized supporters of Tea Party candidates will turn out in huge numbers.  Beyond that, many pundits believe that Obama is actually having a “radioactive” effect on those campaigns where he intercedes.  Discussions of this subject eventually result in speculation that President Obama will not seek a second term.  After all …  he couldn’t possibly intend on running for re-election after what he has done to his supporters.  Consider the way Mr. Obama speaks about his supporters and there are only two explanations.  The first explanation is based on the theory that Obama is arrogant and unconcerned – taking his constituency for granted.  The second theory is that he is unconcerned about what his supporters think of his performance because he has no intention of seeking a second term.

President Obama recently spoke at a $30,000-per-plate fundraising event for the Democratic National Committee at the home of Richard and Ellen Richman.  (Think about that name for a second:  Rich Richman.)  Mr. Richman lives up to his surname and resides in the impressive Conyers Farm development in Greenwich, Connecticut.  Christopher Keating of the Capitolwatch blog at courant.com provided us with the President’s remarks, addressed to the well-heeled attendees:

.   .   .   Democrats, just congenitally, tend to get — to see the glass as half empty.   (Laughter.)  If we get an historic health care bill passed — oh, well, the public option wasn’t there.  If you get the financial reform bill passed — then, well, I don’t know about this particularly derivatives rule, I’m not sure that I’m satisfied with that.  And gosh, we haven’t yet brought about world peace and — (laughter.)  I thought that was going to happen quicker.  (Laughter.) You know who you are.  (Laughter.)

The tactlessness of those remarks was not lost on Glenn Greenwald of Salon.com.  Mr. Greenwald transcended the perspective of an offended liberal to question what could possibly have been going on in the mind of the speaker:

What’s most striking about Obama’s comments is that there is no acceptance whatsoever of responsibility (I’ve failed in some critical areas; we could have/should have done better).  There’s not even any base-motivating vow to fight to fix these particular failures (we’ll keep fighting for a public option/to curb executive power abuses/to reduce lobbyist and corporate control of our political process).  Instead, he wants you to know that if you criticize him — or even question what he’s done (“well, I don’t know about this particular derivatives rule, I’m not sure that I’m satisfied with that”) – it’s your fault:  for being some sort of naive, fringe-leftist idiot who thought he would eliminate the Pentagon and bring about world peace in 18 months, and/or because you simply don’t sufficiently appreciate everything he’s done for you because you’re congenitally dissatisfied.

*    *    *

Sitting at a $30,000 per plate fundraising dinner and mocking liberal critics as irrational ingrates while wealthy Party donors laugh probably does wonders for bruised presidential egos, but it doesn’t seem to be a particularly effective way to motivate those who are so unmotivated.  Then again, Barack Obama isn’t actually up for election in November, so perhaps the former goal is more important to him than the latter.  It certainly seems that way from these comments.

Of course, liberals weren’t the only Obama supporters who felt betrayed by the President’s abandonment of his campaign promises.  In fact, Obama owed his 2008 victory to those independent voters who drank the “Hope and Change” Kool-Aid.

Glenn Greenwald devoted some space from his Salon piece to illustrate how President Obama seems to be continuing the agenda of President Bush.  I was reminded of the quote from former Attorney General John Ashcroft in an article written by Jane Mayer for The New Yorker.  When discussing how he expected the Obama Presidency would differ from the Presidency of his former boss, George W. Bush, Ashcroft said:

“How will he be different?  The main difference is going to be that he spells his name ‘O-b-a-m-a,’ not ‘B-u-s-h.’ ”

One important difference that Ashcroft failed to anticipate was that Bush knew better than to disparage his own base.  The likely reason for this distinction could have been Bush’s intention to run for a second term.



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Not Getting It Done

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August 9, 2010

Are the Democrats trying to lose their majorities in both the Senate and the House in November?  Their two biggest accomplishments, the healthcare “reform” bill and the financial “reform” bill haven’t really impressed the electorate.  According to a Gallup Poll, voter reaction to the passage of the “Affordable Healthcare Act” is 49 percent contending that the bill is a “good thing” as opposed to 46 percent who believe it is a “bad thing”, with 5 percent undecided.  Criticism of the “Wall Street Reform and Consumer Protection Act of 2010” has been widespread, as I have previously discussed here, here and here.  The latest critique of the bill came from Professor Thomas F. Cooley, of the Stern School of Business at NYU.  His Forbes article entitled, “The Politics Of Regulatory Reform”, was based on this theme:

The awareness of how close we came to paralyzing the financial system created an opportunity to do something truly significant to make the system safer and more in tune with the needs of our economy.  Sadly, because all things in Washington are political, we fumbled the ball.

Rahm Emanuel’s infamous doctrine, “You never want a serious crisis to go to waste” is apparently being disregarded by Rahm Emanuel and company at The White House.  Of course, the entire economic catastrophe has provided the Obama administration with a boatload of crises – most of which have already gone to waste.  For example, consider this fiasco-in-progress:  The “small business” sector plays such an important role in keeping Americans employed, a bill to facilitate lending to small businesses has been sponsored by Senator Mary Landrieu (D-Louisiana).  An August 7 report by Sharon Bernstein of the Los Angeles Times provided this update on the status of the measure:

The small business loan assistance ran into trouble in the Senate when members from both parties began attaching amendments to support their favored causes.

The ineffective efforts of Senate Democrats are unfairly souring public opinion on their more unified counterparts in the House.  In attempt to redeem the image of Congressional Dems, House Speaker Nancy Pelosi scheduled a special session of Congress for Tuesday, August 10, (an interruption of their August recess) to pass a $26-billion bill to avert public employee layoffs.

With the passing of time, it has become more obvious that President Obama’s biggest mistake since taking office was his weak leadership in promoting the economic stimulus effort.  Many commentators have expressed the opinion that Christina Romer’s resignation as chair of the President’s Council of Economic Advisors was based on her frustration with the under-funded stimulus program.

I recently wrote an “I told you so” piece, referencing my July, 2009 prediction that it would eventually become necessary for President Obama to introduce a second stimulus bill because the $787 billion proposal would prove inadequate.  At his blog, liberal economist Paul Krugman similarly reminded readers of his prediction about the consequences for failing to pass an effective stimulus bill:

So here’s the picture that scares me:  It’s September 2009, the unemployment rate has passed 9 percent, and despite the early round of stimulus spending it’s still headed up.  Mr. Obama finally concedes that a bigger stimulus is needed.

But he can’t get his new plan through Congress because approval for his economic policies has plummeted, partly because his policies are seen to have failed, partly because job-creation policies are conflated in the public mind with deeply unpopular bank bailouts.  And as a result, the recession rages on, unchecked.

The reality has turned out even worse than Krugman’s prediction because we are now approaching September 2010 – an election year – and the unemployment rate is being understated at 9.5 percent.  The conflation Krugman discussed has manifested itself in the narrative of the Tea Party movement.  In September of 2009, I discussed why Obama should have been listening to Australian economist Steve Keen, who – by that point – was saying basically the same thing:

So giving the stimulus to the debtors is a more potent way of reducing the impact of a credit crunch — the opposite of the advice given to Obama by his neoclassical advisers.

Economist Joseph Stiglitz recently provided us with this update about how the global financial crisis is affecting Australia in August of 2010:

Kevin Rudd, who was prime minister when the crisis struck, put in place one of the best-designed Keynesian stimulus packages of any country in the world.  He realized that it was important to act early, with money that would be spent quickly, but that there was a risk that the crisis would not be over soon.  So the first part of the stimulus was cash grants, followed by investments, which would take longer to put into place.

Rudd’s stimulus worked:  Australia had the shortest and shallowest of recessions of the advanced industrial countries.

Meanwhile, President Obama and the Democrats have decided to utilize a mid-term campaign strategy of assessing all of the blame for our current financial chaos on President George W. Bush.  Criticism of this approach has been voiced by people outside of the Republican camp.  Frank Rich of The New York Times lamented the lack of message control exercised by the Democrats and their ill-advised focus on the Bush era:

But rather than wait for miracles or pray that Bushphobia will save the day, Democrats might instead start playing the hand they’ve been dealt.  Elections, the cliché goes, are about the future, not the past.  At the very least they’re about the present.

At this point in American history, it’s becoming more obvious that the two-party system has served no other purpose than to perpetuate the careers of blundering grafters.  The voting public must accept the reality that the only way it will be honestly and effectively represented in Washington is by independent candidates.  The laws that keep those independents off the ballots must be changed.




Living Up To A Title

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June 7, 2010

It was back on April 9, 2009 – before President Obama had completed his third month in office – when I first referred to him as the “Disappointer-in-Chief”.  I concluded that piece with this gloomy prediction:

If President Obama does not change course and deviate from the Geithner-Summers plan before it’s too late, his legacy will be a ten-year recession rather than a two-year recession without the PPIP.  Worse yet, the toughest criticism and the most pressure against his administration are coming from people he has considered his supporters.  At least he has the people at Fox News to provide some laughable “decoy” reports to keep his hard-core adversaries otherwise occupied.

Just two weeks earlier —  on March 23, 2009 – I had been discussing the widespread apprehension over Obama’s planned bailout of the largest banks (the so-called “Financial Stability Plan” which later morphed into the PPIP).  At that point, Frank Rich of The New York Times made a premature use of the term “Obama’s Katrina moment”.

With the arrival of Obama’s real “Katrina moment” — by way of the Deepwater Horizon blowout –  we are again hearing a chorus of criticism directed against the Obama administration, not unlike what we heard during those first few months.  Now that our new President has established a track record of bad decisions, let’s take a look at some reactions from people the Fox News will insist are loyal Obama supporters.  First we had Maureen Dowd of The New York Times, who delivered a one-two punch to the man she has called “Barry” (when mad at him) on May 29 and June 1:

In the campaign, Obama’s fight flagged to the point that his donors openly upbraided him.  In the Oval, he waited too long to express outrage and offer leadership on A.I.G., the banks, the bonuses, the job loss and mortgage fears, the Christmas underwear bomber, the death panel scare tactics, the ugly name-calling of Tea Party protesters.

Too often it feels as though Barry is watching from a balcony, reluctant to enter the fray until the clamor of the crowd forces him to come down.  The pattern is perverse.  The man whose presidency is rooted in his ability to inspire withholds that inspiration when it is most needed.

Ouch!  If that weren’t enough, Ms. Dowd’s June 1 punch had to hurt:

This president has made it clear that he’s not comfortable outside whatever domain he’s defined.  But unless he wants his story to be marred by a pattern of passivity, detachment, acquiescence and compromise, he’d better seize control of the story line of his White House years.  Woe-is-me is not an attractive narrative.

Also at The New York Times, Frank Rich expressed his impatience with the President – now that the real “Katrina moment” has arrived:

We still want to believe that Obama is on our side, willing to fight those bad corporate actors who cut corners and gambled recklessly while regulators slept, Congress raked in contributions, and we got stuck with the wreckage and the bills.  But his leadership style keeps sowing confusion about his loyalties, puncturing holes in the powerful tale he could tell.

*   *   *

No high-powered White House meetings or risk analyses were needed to discern how treacherous it was to trust BP this time.  An intern could have figured it out.  But the credulous attitude toward BP is no anomaly for the administration.  Lloyd Blankfein of Goldman Sachs was praised by the president as a “savvy” businessman two months before the Securities and Exchange Commission sued Goldman.  Well before then, there had been a flood of journalistic indicators that Goldman under Blankfein may have gamed the crash and the bailout.

It’s this misplaced trust in elites both outside the White House and within it that seems to prevent Obama from realizing the moment that history has handed to him.  Americans are still seething at the bonus-grabbing titans of the bubble and at the public and private institutions that failed to police them.  But rather than embrace a unifying vision that could ignite his presidency, Obama shies away from connecting the dots as forcefully and relentlessly as the facts and Americans’ anger demand.

Back on December 14, I pointed out how the so-called “race card” has not been a free pass for the Disappointer-in-Chief:

As we approach the conclusion of Obama’s first year in the White House, it has become apparent that the Disappointer-in-Chief has not only alienated the Democratic Party’s liberal base, but he has also let down a demographic he thought he could take for granted:  the African-American voters.  At this point, Obama has “transcended race” with his ability to dishearten loyal black voters just as deftly as he has chagrined loyal supporters from all ethnic groups.

The most recent example of this phenomenon appeared in the form of an opinion piece by Tony Norman of the Pittsburgh Post-Gazette.  Here is some of what Mr. Norman had to say:

At a Memorial Day dinner I attended, there wasn’t just disappointment with Mr. Obama’s inability to find his inner Huey Long — there was an undercurrent of genuine anger.

It went far beyond the handling of the BP crisis.  As far as anyone can tell, there isn’t much to distinguish Mr. Obama’s policies in Afghanistan and Iraq from his predecessor’s.

Beyond the Deepwater Horizon, Mr. Obama has been a disappointment on civil liberties, banking reform, military spending, the drug war, Middle East policy, immigration and the environment.  Political gamesmanship and calculation of the rankest kind continue.  Even his latest Supreme Court nominee shows every indication of being as colorless as the president has proven to be in recent months.  It’s too much to expect this president to champion a progressive Supreme Court candidate.

Meanwhile, the corrupt culture of Wall Street continues to set the agenda, thanks to cowardly Democrats and nihilistic Republicans.  Accountability is as much a dirty word for Mr. Obama as it was for President George W. Bush.

*   *   *

Honestly, other than the particularities of the historical record, it no longer makes sense to blame Mr. Bush for much when Mr. Obama has done little — other than improvise a less belligerent foreign policy — to distinguish himself from the 43rd president.

I won’t spoil the rest of Mr. Norman’s article.  Just be sure to read it.  (Hint:  It includes some nice speculation about how the new President was likely pulled aside by some members of the plutocracy, who gave him “The Talk”.)

Meanwhile, the Presidential disappointments continue.  It appears as though we are going to wait for God to stop the oil from gushing into the Gulf of Mexico.  Since we have left it to God to do the wetlands protection and the clean-up, this shouldn’t be too surprising.   I’m beginning to suspect that President Obama’s religious ideas are even more far-out than those of President Bush. –  It’s just that President Obama doesn’t talk about them.





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2009 Jackass Of The Year Award

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December 31, 2009

Well, it’s that time once again!  The 2008 competition brought us a robust field of candidates, probably because it was an election year.  This year, I’ve decided to ignore the one-event wonders and stick with nominees demonstrating a consistent pattern of jackass behavior.  The isolated exhibitions of foolishness illustrated by Richard Heene’s “balloon boy” hoax and Janet Napolitano’s “the system worked” gaffe, just don’t rise to the level of an award-winning honor.  I’m also avoiding individuals categorized as “the usual suspects” — the media darlings who are already getting beaten-up in the 2009 retrospective shows.  That list includes such notables as Tiger Woods, Carrie Prejean and “The Undiebomber” (Umar Mutallab).

This year I have narrowed the competition down to two people.

In just a few short weeks, our first nominee will be celebrating the anniversary of his inauguration as President of the United States.  During his early days in office, he enjoyed an approval rating as high as 69 percent, according to Gallup.  By early December, Gallup reported that his approval rating had taken a 22-point drop to 47 percent.  At that time, Rasmussen Reports revealed that not only had the President’s approval rating dropped to 48 percent — his disapproval rating actually reached 52 percent! On December 9, Quinnipiac University published the results of a poll conducted during December 1 – 6.  The results gave the President a job approval rating of only 46 percent, and those disapproving Obama’s performance amounted to 44 percent.  The Ipsos/McClatchy Poll taken during that period, disclosed that the President received his highest “unsatisfactory” rating on the issue of “jobs and the economy” with 45 percent giving the President an unsatisfactory grade (D or F) while only 36 percent gave him a satisfactory grade (A or B) and 19 percent gave him a C.

Many commentators have pondered over the reasons for President Obama’s decreasing approval ratings.  I have previously discussed the subject here, here and here.  In doing so, I found the criticism of Obama’s performance as expressed by Edward Harrison of Credit Writedowns, to be particularly insightful.  In his December 27 posting, Mr. Harrison posed a question that has obviously been on the minds of many disappointed Obama supporters:

The question is this:

  • Did President Obama sell out (i.e. he was a good guy but has been corrupted in short order) or;
  • Did Obama find out he couldn’t change the status quo so easily (i.e. he was a good guy who was naive about the President’s real power)or;
  • Did the President simply bamboozle us (i.e. he was a bad guy who tricked the electorate with his silver tongue)?

Mr. Harrison contended that the foregoing inquiry is actually irrelevant because it involves ascribing an intent behind the President’s behavior, when we should be looking at either motive or outcome.  Mr. Harrison eventually focused on a recent op-ed piece by Ross Douthat of The New York Times entitled:  “The Obama Way”.  Obama’s track record of broken campaign promises, including “no more trickle-down economics” and those documented on The Obameter, is something that obviously weighs on the minds of dispirited Obama supporters.  Ross Douthat explained how the President’s leadership style is itself a broken campaign promise:

He’s a doctrinaire liberal who’s always willing to cut a deal and grab for half the loaf.  He has the policy preferences of a progressive blogger, but the governing style of a seasoned Beltway wheeler-dealer.

*   *   *

It’s also puzzling because Obama promised exactly the opposite approach while running for the presidency.  He campaigned as a postpartisan healer who would change the cynical ways of Washington — as a foe of both back-room deals and ideology-as-usual.  But he’s governed as a conventional liberal who believes in the existing system, knows how to work it and accepts the limitations it imposes on him.

*   *   *

The upside of this approach is obvious:  It gets things done.

*   *   *

The downside, though, is that sometimes what gets done isn’t worth doing.  The assumption that a compromised victory is better than no victory at all can produce phony achievements — like last week’s “global agreement” on climate change — and bloated, ugly legislation.  And using cynical means to progressive ends (think of the pork-laden stimulus bill or the frantic vote-buying that preceded this week’s Senate health care votes) tends to confirm independent voters’ worst fears about liberal government:  that it’s a racket rigged to benefit privileged insiders and a corrupt marketplace floated by our tax dollars.

Ross Douthat’s conclusion implied that it’s still too early determine whether Obama’s political approach will ultimately result in success or failure.  By this time next year, the mid-term elections will be over.  If the careers of many Democratic politicians are over at that point, we will then have to assess whether President Obama’s leadership style helped to bring them down.  As a result, we will have to defer to next year’s competition before deciding whether our new President rates the title “Jackass of the Year”.

Our second nominee is the so-called “Supreme Leader” of Iran, Ali Khamenei.  Khamenei decided to rig the June elections to ensure that his tool, the equally crazy Mahmoud Ahmadinejad, would be re-elected.  The resulting public outrage was escalated by Khamenei into a bloodbath.  Since that time, Khamenei’s ham-handed tactics in attempting to squelch opposition have only made things worse.  A recent New York Times editorial entitled “Iran’s War on Its People” put it this way:

Iran’s leaders are so desperate to repel a rising tide of popular unrest that even Ashura — which marks the death of Shiite Islam’s holiest martyr — is no longer sacred.

The anniversary, which fell on Sunday, is supposed to be a time of peaceful commemoration.  Even during war, Iranian governments have honored the prohibitions against violence during a two-month period surrounding Ashura.  Tehran’s current rulers have proved again that their only belief is in their own survival.

On Sunday, the police opened fire on a crowd of protesters, reportedly killing at least 10 people, and arrested hundreds more.  Government forces are also believed to be behind the assassination of Ali Moussavi, nephew of the opposition leader Mir Hussein Moussavi, the leading candidate in June’s fraudulent presidential election.

*   *   *

The government still appears to have firm control of the main levers of power, including the brutish Revolutionary Guard and the Basij militia.  But Ayatollah Khamenei — who helped lead the 1979 revolution against the shah — should not ignore the echoes of history when protesters defy the death blows of security forces and chant “Death to the dictator” on the streets of Tehran.

Al Jazeera’s Teymoor Nabili reported that Baqer Moin, London-based analyst and Ayatollah Khomeini biographer, explained that Iran’s opposition party, the Greens, would still settle for modest reform, if the regime would compromise.  Nevertheless, Mr. Nabili’s report quoted other sources who expressed concern that the upcoming anniversary of the revolution could be “the next potential spark”.  Will the Supreme Leader negotiate?  Based on his record over the past six months, there is no reason to believe that he will.  His strategy of cracking down on the Greens with more deadly repression is exactly the approach that could lead to the regime’s demise.  Mr. Nabili added this insight to an already gloomy picture:

A contact in Iran tells me that, given the arrests over the past two days, the trend points to the possibility that the regime is slowly tightening the screws, and that before then we might see martial law and the arrest of Mousavi and/or Karroubi/Khatami/Rafsanjani’s daughter (Rafsanjani himself is still beyond the pale, it would seem.)

Brilliant plan, huh?  Another Al Jazeera report revealed that the Iranian government’s desperate actions are a sign of weakness that could ultimately lead to the end of Khamenei’s days as “Supreme Leader”:

Fatemeh Haghighatjoo, a former member of the Iranian parliament, told Al Jazeera that the government faced a fundamental crisis.

“They can’t control the events so they made the Ashoura incidents as a scenario that could give [them] enough confidence to crack down on the [Green] Movement,” she said from Massachusetts in the United States.

“They think that if they could use more violence, they can stop the movement … if this strategy continues I think we could see the collapse of the government.”

After George W. Bush overthrew the regime of Saddam Hussein in Iraq, many commentators expressed concern that this development could bring about an era of Iranian hegemony in the Middle East.  Nevertheless, Iran’s relentless efforts to create a nuclear arsenal and the craziness of its Supreme Leader, who would likely detonate an atomic bomb in Israel if he had such a weapon, have apparently made the Iranian people more than a little uncomfortable with their government.  The events since June could only serve to underscore fears that the Khamenei regime would attempt a nuclear strike on Israel, resulting in a retaliatory move that would wipe Tehran off the map.  The Iranian people are obviously not going to sit on their hands and wait for that to happen.  Al Jazeera’s Teymoor Nabili provided us with some insight on the current mood of the Iranian protesters:

To outside observers, though, the protestors have defied expectations.  Their continued willingness to make themselves targets has been a surprise; now it seems as if they are willing to take it even further, protesting not only against the election result but against the very essence of the regime.

Although it may be too early to celebrate the demise of the Khamenei regime, the time is certainly right to honor Iran’s Supreme Leader, Ali Khamenei, with TheCenterLane.com‘s Jackass of the Year Award.   Congratulations, Jackass!



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Spread The Word

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September 29, 2009

I’ve seen quite a few articles and broadcasts from “mainstream” news sources during the past few weeks that have actually made me feel encouraged about the public’s response to the financial crisis and our current economic predicament.  Six months ago, the dirty picture of what caused last year’s near-meltdown and what has continued to prevent the necessary reforms, was something one could find only by reading a relatively small number of blogs.  Michael Panzner wrote a book entitled Financial Armageddon in 2006, predicting what many “experts” later described as unforeseeable.  Mr. Panzner now has a blog called Financial Armageddon (as well as another: When Giants Fall).  At his Financial Armageddon website, Mr. Panzner has helped ease the pain of the economic catastrophe with a little humor by educating his readers on some novel measurements of our recession level — such as the increased use of hair dye and “The Hot Waitress Index”.   (He ran another great posting about the increasing number of disastrous experiences for people who tried to save money by cutting their own hair.)   Meanwhile, Matt Taibbi has continued to serve as a gadfly against crony capitalism.   Zero Hedge keeps us regularly apprised of the suspicious activities in the equities and futures markets, which are of no apparent concern to regulatory officials.   Some bloggers, including Jr Deputy Accountant, have criticized the manic money-printing and other inappropriate activities at the Federal Reserve — which resists all efforts at oversight and transparency.  One no longer experiences the stigma of “conspiracy theorist” by accepting the view that our financial and economic problems were caused primarily by regulatory failure.

On September 23, Dan Gerstein wrote a piece for Forbes, about the impressive, 25-page article concerning last year’s financial crisis, written by James Stewart for The New Yorker, entitled:   “Eight Days”.  At the outset, Mr. Gerstein noted how the New Yorker article provided the reader with some shocking insight on someone we all thought we knew pretty well:

But the biggest eye-opener was that the most incisive and damning questions raised by any of our leaders during this existential crisis came from none other than the era’s top free-market cheerleader in Washington, George W. Bush.

*   *   *

Paulson and Bernanke alerted Bush that AIG was about to fail, warned of the massive ripple effect AIG going bust would have on the global economy, and explained why the Fed could not intervene with an insurance company to stop this systemic threat.  In response, Bush asked  “How have we come to the point where we can’t let an institution fail without affecting the whole economy?”

The question raised by President Bush is still tragically apt, since nothing has been accomplished in the past year to break up or downsize those institutions considered “too big to fail”.  Mr. Gerstein’s experience from reading the New Yorker article helped reinforce the understanding that our current situation is not only the result of regulatory failure, but it’s also a by-product of something called “regulatory capture” —  wherein the regulators are beholden to those whom they are supposed to regulate:

Once disaster was averted and the system stabilized, Paulson, Geithner and Bernanke had no excuse for not laying down the law to Wall Street — figuratively and literally — in the ensuing weeks.  By that I mean restructuring the deals we struck with the banks to get far better returns for taxpayers and rewriting the rules governing the financial system to prevent them from ever thinking they could gamble risk-free with our money again.

*   *   *

There’s no apparent sense of apartness or independence between regulator and regulated.  To the contrary, there’s a power imbalance in the wrong direction, with the regulators dependent on and even at the mercy of the regulated.  What does it say about the integrity and even the sanity of this system when the doctors have to ask the inmates how to restructure their treatments?

I was particularly impressed by Dan Gerstein’s closing remarks in the Forbes piece.  It was encouraging to see another commentary in a mainstream media source, consistent with the ranting I did here, here and here.  Mr. Gerstein expressed dismay at the lack of attention given to the unpleasant truth that we live in a plutocracy which won’t be changed until the people demand it:

That’s why I was so disappointed to find Stewart’s epic article buried in the elite pages of the New Yorker.  It should have been serialized on the front pages of every newspaper in the country last week, so every American would be reminded in full detail of just how warped and rigged our financial system has been — and why it still is.  Maybe then it might sink in that getting mad won’t get us even in the power struggle with the financial elites for control of our economy, and that change won’t happen until taxpayers demand it.  You want public accountability for Wall Street?  Let’s start with an accountable public.

Each time an article such as Dan Gerstein’s “Too Close For Comfort” gets widespread exposure, we move one step closer to the point where we have an informed, accountable public.  It’s unfortunate that his commentary was buried in the elite pages of Forbes.  That’s why I have it here.  Spread the word.



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Turning Over A Rock

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September 24, 2009

Last year’s financial crisis and our current economic crisis have exposed some pretty ugly things to an unsuspecting public.  As news reporters dig and as witnesses are called to testify, these investigations are turning over a very large rock, revealing all the colonies of maggots and fungus infestations, just below ground level, out of our usual view.  The voters are learning more about the sleaziness that takes place on Wall Street and in the halls of Congress.  Hopefully, they will become motivated to demand some changes.

A recent report by American Public Media’s Steve Henn revealed how the law prohibiting “insider trading” (i.e. acting on confidential corporate information when making a transaction involving that company’s publicly-traded stock) does not apply to members of Congress.  Remember how Martha Stewart went to prison?  Well, if she had been representing Connecticut in Congress, she might have been able to interpose the defense that she was inspired to sell her ImClone stock based on information she acquired in the exercise of her official duties.  Mr. Henn’s report discussed the investment transactions made by some Senators after having been informed by former Treasury Secretary Hank Paulson and Federal Reserve Chairman Ben Bernanke, that our financial system was on the verge of a meltdown.  After quoting GOP House Minority Leader John Boehner’s public acknowledgement last September that:

We clearly have an unprecedented crisis in our financial system.   .   .   .

On behalf of the American people our job is to put our partisan differences aside and to work together to help solve this crisis.

Mr. Henn proceeded to explain how swift Senatorial action resulted in a bipartisan exercise of greed:

The next day, according to personal financial disclosures, Boehner cashed out of a fund designed to profit from inflation.  Since he sold, it’s lost more than half its value.

Sen. Dick Durbin, an Illinois Democrat, who was also at that meeting sold more than $40,000 in mutual funds and reinvested it all with Warren Buffett.

Durbin said like millions of others he was worried about his retirement. Boehner says his stock broker acted alone without even talking to him.  Both lawmakers say they didn’t benefit from any special tips.

But over time members of Congress do much better than the rest of us when playing the stock market.

*   *   *

The value of information that flows from the inner workings of Washington isn’t lost on Wall Street professionals.

Michael Bagley is a former congressional staffer who now runs the OSINT Group. Bagley sells access and research. His clients are hedge funds, and he makes it his business to mine Congress and the rest of Washington for tips.

MICHAEL Bagley: The power center of finance has moved from Wall Street to Washington.

His firm is just one recent entry into Washington’s newest growth industry.

CRAIG HOLMAN: It’s called political intelligence.

Craig Holman is at Public Citizen, a consumer watchdog.  Holman believes lobbyists shouldn’t be allowed to sell tips to hedge funds and members of Congress shouldn’t trade on non-public information.  But right now it’s legal.

HOLMAN: It’s absolutely incredible, but the Securities and Exchange Act does not apply to members of Congress, congressional staff or even lobbyists.

That law bans corporate insiders, from executives to their bankers and lawyers, from trading on inside information.  But it doesn’t apply to political intelligence.  That makes this business lucrative.  Bagley says firms can charge hedge funds $25,000 a month just to follow a hot issue.

BAGLEY: So information is a commodity in Washington.

Inside information on dozens of issues, from bank capitol requirements to new student loan rules, can move markets.  Consumer advocate Craig Holman is backing a bill called the STOCK Act.  Introduced in the House, it would force political-intelligence firms to disclose their clients and it would ban lawmakers, staffers, and lobbyists from profiting on non-public knowledge.

Mr. Henn’s report went on to raise concern over the fact that there is nothing to stop members of Congress from acting on such information to the detriment of their constituents in favor of their own portfolios.

In his prepared testimony before the House Financial Services Committee this morning, former Federal Reserve Chair Paul Volcker made this observation:

I understand, and share, concern that the financial crisis has revealed weaknesses in our regulatory and supervisory agencies as well as in the activities of private financial institutions.  There has been criticism of the Federal Reserve itself, and even proposals to remove responsibilities other than monetary policy, strictly defined, from the Fed.

Mr. Volcker discussed a number of suggestions for regulatory changes to prevent a repeat of last year’s crisis.  He criticized Treasury Secretary “Turbo” Tim Geithner’s approach toward what amounts to simply baby-sitting for those financial institutions considered “too big to fail”.   Here is some of Mr. Volcker’s discussion on that point:

However well justified in terms of dealing with the extreme threats to the financial system in the midst of crisis, the emergency actions of the Federal Reserve, the Treasury, and ultimately the Congress to protect the viability of particular institutions – their bond holders and to some extent even their stockholders – have inevitably left an indelible mark on attitudes and behavior patterns of market participants.

  • Will not the pattern of protection for the largest banks and their holding companies tend to encourage greater risk-taking, including active participation in volatile capital markets, especially when compensation practices so greatly reward short-term success?
  • Are community or regional banks to be deemed “too small to save”, raising questions of competitive viability?

*   *   *

What all this amounts to is an unintended and unanticipated extension of the official “safety net”, an arrangement designed decades ago to protect the stability of the commercial banking system.  The obvious danger is that with the passage of time, risk-taking will be encouraged and efforts at prudential restraint will be resisted.  Ultimately, the possibility of further crises – even greater crises – will increase.

This concern is often discussed as the “moral hazard” issue.  William Black, Associate Professor of Economics and Law at the University of Missouri – Kansas City published an excellent paper concerning this issue on September 10.  He made some great suggestions as to how to deal with these “Systemically Dangerous Institutions”:

Historically, “too big to fail” was a misnomer – large, insolvent banks and S&Ls were placed in receivership and their “risk capital” (shareholders and subordinated debtholders) received nothing.  That treatment is fair, minimizes the costs to the taxpayers, and minimizes “moral hazard.”  “Too big to fail” meant only that they were not placed in liquidating receiverships (akin to a Chapter 7 “liquidating” bankruptcy).  In this crisis, however, regulators have twisted the term into immunity.  Massive insolvent banks are not placed in receivership, their senior managers are left in place, and the taxpayers secretly subsidize their risk capital.  This policy is indefensible.  It is also unlawful.  It violates the Prompt Corrective Action law.  If it is continued it will cause future crises and recurrent scandals.

*   *   *

Under the current regulatory system banks that are too big to fail pose a clear and present danger to the economy.  They are not national assets.  A bank that is too big to fail is too big to operate safely and too big to regulate.  It poses a systemic risk. These banks are not “systemically important”, they are “systemically dangerous.”  They are ticking time bombs – except that many of them have already exploded.

Mr. Black then listed twenty areas of reform where these institutions would face additional regulatory compliance and restrictions on their activities, including a ban on “all new speculative investments”.     Paul Volcker took that issue a step further with his criticism of “proprietary trading” by these institutions, which often can result in conflicts of interest with customers, since these banks are trading on their own accounts while in a position to act on the confidential investing strategies of their clients.

Paul Volcker made a point of emphasizing the need to clarify the overlapping jurisdictions of the Securities and Exchange Commission and the Commodity Futures Trading Commission (CFTC).  On September 18, David Corn wrote a piece about the CFTC, describing it as:

…  a somewhat obscure federal agency, but an important one. Its mission is to protect consumers and investors by preventing misconduct in futures trading that could distort the prices of agricultural and energy commodities.  In 2000, the CFTC wanted to regulate credit default swaps — complicated and privately traded financial instruments that helped grease the way to the subprime meltdown — but Republican Sen. Phil Gramm, then the chair of the Senate Banking Committee, Fed chair Alan Greenspan and Clinton administration officials (including Lawrence Summers, now President Obama’s top economic adviser) blocked that effort.  Had the CFTC been allowed to police swaps, the housing finance crisis that begot the economic crash of last year might not have been as bad.  So the CFTC is a critical agency.  And under Obama’s proposal for more robust financial regulation — which he talked about during a Wall Street visit on Monday — the CFTC would have greater responsibility to make sure no one was gaming the financial system.  Consequently, the composition of the CFTC is more significant than ever.

Mr. Corn expressed his concern over the fact that the Obama administration had nominated Scott O’Malia, a Republican Senate aide, to be a commissioner on the CTFC:

For the past seven years, he’s been a GOP staffer in the Senate.  But before that he was a lobbyist for Mirant, an Atlanta-based electricity company. According to House and Senate records, while at Mirant O’Malia was registered to lobby for greater deregulation at a time when his company was exploiting the then-ongoing deregulation of the energy market to bilk consumers.  Remember the Enron-driven electricity crisis in California of 2001, when Enron and other companies were manipulating the state’s deregulated electricity markets, causing prices to go sky-high, creating rolling black-outs and triggering a statewide emergency?  Mirant was one of those other companies.  According to state investigators, Mirant deliberately held back power to force prices up.

After the crisis, Mirant was investigated by various federal and local agencies and became the target of a number of lawsuits.  It ultimately agreed to pay California about half a billion dollars to settle claims it had screwed the state’s residents.  It also was fined $12.5 million — by the CFTC! — for attempting to manipulate natural gas prices.

Mr. O’Malia had previously been nominated for this position by President George W. Bush.  Nevertheless, Washington Senator Maria Cantwell helped block the nomination.  As a result, David Corn was understandably shocked when O’Malia was re-nominated for this same position by the Obama administration:

Yet Obama has brought it back.  Why would a president who craves change in Washington and who wants the CFTC to be a tougher watchdog do that?

The answer to that question is another question:  Does President Obama really want the CFTC to be a tougher watchdog or just another “lap dog” like the SEC?

After all the promises of the needed regulatory “clean-up” to prevent another financial crisis, can we really trust our current leadership to accomplish anything toward that goal?



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Joining The Supremes

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May 4, 2009

On April 30, Supreme Court Justice David Souter announced his intention to retire after the current court term recess in June.  Many were surprised by this announcement.  Since Justice John Paul Stevens is 89 and Justice Ruth Bader Ginsburg is 76, most Supreme Court watchers expected one of those two jurists to be the first to retire after the election of President Obama.  Those who know Justice Souter all concur that he hates living in Washington, D.C. where he is a reluctant member of the capitol’s “elite”.

Watching Friday’s news programs, I was amused by the mad scramble by those on the “hard right” to organize their opposition to the confirmation of Preisdent Obama’s nominee to the high court.  Obama has not yet even announced whom he intends to nominate, yet these reactionaries are already against that person.  So, the fun begins  . . .

Once the President makes the nomination, the Senate Judiciary Committee begins the confirmation hearings, wherein the candidate will become incessantly badgered about his or her views on abortion, gay weddings, gun control and whether the court should “intervene” by overturning patently unconstitutional laws enacted by a bought-off (Oops!  — I mean “lobbied”) Congress.  The Judiciary Committee then issues its report and the full Senate votes to either confirm or reject the nomination with 51 votes.

This process became a spectator sport back in 1987, when Ronald Reagan nominated the Amish-looking, Robert Bork.  The Democrats immediately launched a full-on battle against the nomination, considered by many as a bit over-the-top, since it involved scrutiny of Bork’s video rentals.  This particular judicial confirmation resulted in the use of the word “Bork” as a verb.  Since that time, getting “Borked” described any situation wherein a political appointee became the target of a partisan attack during the confirmation process.  Nevertheless, Bork’s view that the Constitution provides no guarantee of an individual’s right to privacy, justified much of the ire against him.  During the confirmation hearings, he criticized the decision in Roe v. Wade.  Dumb idea.  Since that time, Republican nominees to any Federal Court do all they can to avoid providing straight answers to questions dealing with a woman’s right to determine whether she will carry a fetus to term.

The most entertaining confirmation hearings came along when George H.W. Bush nominated Clarence Thomas to the Supreme Court in 1991.  By that time, Bush appointee David Souter had already begun to disappoint the “hard right”.  The administration wanted to be sure they had a hard-line conservative this time and in Thomas they found the prefect candidate to replace the court’s first African-American Justice, Thurgood Marshall, who retired.  The excitement began when the committee heard testimony from Anita Hill, who had worked for Thomas at the Equal Employment Opportunity Commission (EEOC).  Ms. Hill testified that while working at the EEOC, she was sexually harassed by Clarence Thomas on several occasions.  The most memorable portion of her testimony concerned a remark by Thomas that his favorite porn video was a feature entitled:  Long Dong Silver.  Although Hill’s testimony ultimately did not block the confirmation of Thomas, people began lining up at adult book stores to purchase copies of the overnight classic.  I always wondered whether a certain chain of seafood restaurants also might have benefited from that aspect of the proceedings.

At this point, many Republicans likely assume that President Obama will nominate an ultra-liberal judge to counter-balance the far-right members of the court:  Clarence Thomas and Antonin Scalia.  News outlets are already abuzz with speculation concerning the most likely nominee.  The betting is heavy that Obama will nominate a woman for this vacancy because a man (Samuel Alito) was appointed by George W. Bush to replace Sandra Day O’Connor, one of only two females on the court when Bush took office.  Some pundits expect Obama to nominate someone from a minority group to add a little more diversity to the court.  As a result, many of these people expect Judge Sonia Sotomayor from the Second Circuit Court of Appeals to get the nod.  My prediction is that the President will select Judge Diane Wood from the Seventh Circuit.  She shares Obama’s experience as an instructor at the University of Chicago Law School and she has a solid background.

Nevertheless, we can expect quite a bit of showboating once the confirmation process begins.  It might not be as much fun as the Clarence Thomas hearings  .  .  .  but who knows?

Let the games begin!

Geithner In The Headlights

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April 30, 2009

Regular readers of this blog know that one of my favorite targets for criticism is Treasury Secretary “Turbo” Tim Geithner.  My beef with him concerns his implementation and execution of programs designed to bail out banks at avoidable taxpayer risk and expense.  Lately, we have seen a spate of wonderful articles vindicating my attitude about this man.  One of my favorites was written by Gary Weiss for what was apparently the final issue of Conde Nast Portfolio.  Mr. Weiss began the article discussing what people remember most about Geithner from the first time they saw him on television:

In his worst moments, when the camera lights are burning and the doubt, the contempt, in the Capitol Hill hearing rooms become palpable, Tim Geithner has a look in his eye — at once wary and alarmed, even as he speaks quickly, sometimes interrupting, sometimes repeating his talking points.  It has become a look that he owns.  It is his.  It has made him famous in all the wrong ways.  The Geithner Look.

A few paragraphs later, Weiss recalled Geithner’s disastrous February 10 speech, intended to describe what was then known as the Financial Stability Plan — now referred to as the Public-Private Investment Program (PPIP or pee-pip).  Mr. Weiss recalled one of the reviews of that speech, wherein Geithner was described as having “the eyes of a shoplifter”.  I later learned that it was MSNBC’s Mike Barnicle, who came up with that gem.

The most revealing story about Geithner appeared in the April 26 edition of The New York Times.  This article, written by Jo Becker and Gretchen Morgenson, provided an understanding of Geithner’s background and how that has impacted his decisions and activities as Treasury Secretary.  This piece has received plenty of attention from a variety of commentators, most notably for the in-depth investigation into Geithner’s “roots”.  Becker and Morgenson summed-up their findings this way:

An examination of Mr. Geithner’s five years as president of the New York Fed, an era of unbridled and ultimately disastrous risk-taking by the financial industry, shows that he forged unusually close relationships with executives of Wall Street’s giant financial institutions.

His actions, as a regulator and later a bailout king, often aligned with the industry’s interests and desires, according to interviews with financiers, regulators and analysts and a review of Federal Reserve records.

After a thorough explanation of how Geithner’s social and professional ties have influenced his thinking, the motivation behind Turbo Tim’s creation of the PPIP became clear:

According to a recent report by the inspector general monitoring the bailout, Neil M. Barofsky, Mr. Geithner’s plan to underwrite investors willing to buy the risky mortgage-backed securities still weighing down banks’ books is a boon for private equity and hedge funds but exposes taxpayers to “potential unfairness” by shifting the burden to them.

Becker and Morgenson apparently went to great lengths to avoid characterizing Geithner as venal or corrupt.  Nicholas von Hoffman said it best while discussing the Times article in The Nation:

The authors did not have to spell it out for readers to conclude that Geithner, while honest in the narrow sense of the word, has been extremely helpful to his billionaire mentors and protectors.

Mr. von Hoffman was not so restrained while discussing the behavior of the bailed-out banks in an earlier piece he wrote for The Nation.  In attempting to figure out why those banks did not get back into the business of lending money after the government-provided capital infusions, von Hoffman pondered over some possible reasons.  First, he wondered whether the banks still lacked enough capital to back-up new loans.  I liked his second idea better:

Another possibility is that the banks may have found new ways to steal money, which is more profitable than lending it.  The banks’ conduct has been so devious, so mendacious, so shifty and so dishonorable that you cannot rule out any kind of sharp practice.  You just can’t trust the bastards.

In recent days, some banks have enhanced their reputations by announcing quarterly profits achieved not by business enterprise but by bookkeeping legerdemain.

Renowned journalist Robert Scheer saw fit to praise Becker and Morgenson’s article in a piece he wrote for the Truthdig website (where he serves as editor).  His analysis focused on how Geithner’s views were shaped while working for his mentors in the Clinton administration:   Robert Rubin and Larry Summers.  Scheer reminded us that these are the people who created “the policies that Clinton put in place and George W. Bush accelerated”:

The seeds of the current economic chaos were planted in those years, in which Wall Street lobbyists were given everything they wanted in the way of radical deregulation, and hence was born the madcap world of credit swaps and other unregulated derivatives.

Scheer noted how Turbo Tim has kept alive, what President Obama has often described as “the failed policies of the past eight years”:

Geithner has since pushed the Obama administration to approach the banking crisis not in response to the needs of destitute homeowners but rather from the side of the bankers who are seizing their homes.  Instead of keeping people in their homes with a freeze on foreclosures, he has rewarded the unscrupulous lenders who conned ordinary folks.

He still wants to give more money to Citigroup, which has just been found woefully short of cash by Treasury’s auditors, and has not stopped Fannie Mae, Freddie Mac and some other big banks ostensibly under government influence, and indeed sometimes ownership, from recently ending their temporary moratoriums on housing foreclosures.  Geithner has been in the forefront of coddling the banks in the hopes that welfare for the rich will trickle down to suffering homeowners, but that has not happened.

Rather than just complaining about the problem, Mr. Scheer has suggested a solution:

What is involved here is an extreme case of government-condoned “moral hazard” offering outrageous compensation to the superrich for screwing up royally.  Where is the socially conscious Obama we voted for?   E-mail him and ask.