Tag Archives: Financial Crisis

Analogies

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Steve M has a great analogy in the title of a recent post — “AIG is to righties’ economic theories what George W. Bush is to their political theories.” So true.

Of course, as Steve says, to righties nothing is ever the fault of rightie ideology. In many ways George W. Bush was more Reaganite than Reagan, but as soon as he became overwhelmingly unpopular the Right suddenly discovered Bush was not a “real conservative.” Just so, in their minds the financial sector gurus who drove the economy off a cliff are traitors to free market theory, not the naturally selected consequence of it.

More fascinating — Greg Sargent reports that rightie politicians and rightie media are going separate ways on the AIG scandal.

GOP Congressional leaders have roundly condemned AIG and its executives, as part of a strategy to position themselves as heroic defenders of the taxpayers and to paint the Obama administration as weak and ineffectual. … But increasingly, leading conservative media figures are moving in a different direction: Defending AIG.

Rush Limbaugh recently said: “I am all for the AIG bonuses” and attacked the Obama administration for trying to undo them. He also blasted Dem efforts to get the names of the AIG bonus recipients as “McCarthyism.”

Fox News followed suit, also comparing Dems to “Joe McCarthy.” And Sean Hannity has now derided efforts to tax the execs by saying: “In other words, we’re going to just steal their money.”

If you were a Faux Nooz viewer, exactly how stupid would you have to be to agree with Hannity?

It gets better. Today there’s a story that the House plans to slap a 90 percent tax on the bonuses. Actual title of a Michelle Malkin post in response: “First They Came for the AIG Bonuses.” You can’t make this up.

As I said, this is fascinating; the sort of thing social psychologists ought to be studying. Put the Right under a bell jar, or better yet, on a dissecting table.

We Are Really, Really Angry

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Welcome to another episode of AIG: The Outrage. People are angry! They are really, really angry! They are starting to remind me of Mr. Furious, Ben Stiller’s character in Mystery Men. Which is a pretty good film, btw. If you’ve never seen it, add it to your Netflix queue.

Anyway, being angry is so de rigueur in Washington right now that even Edward Liddy, CEO of AIG, is angry. CNN reports that Liddy is expected to tell Congress today, “We are meeting today at a high point of public anger. I share that anger.” That’s one hell of a bandwagon effect.

Public discussion is devolving into anger correctness. Mo Dowd says President Obama is not angry enough. On the other hand, Ruth Marcus of WaPo thinks Obama is way overdoing the anger. Clearly, we need an Emily Post-type arbiter of what’s appropriate, anger-wise.

David Stout reports for the New York Times that there is an outpouring of anger on the Hill today. I’d turn on CSPAN, but I’m afraid my television set would melt.

It’s not so clear to me that anything will have changed after all the public displays of anger are done and everyone goes home for a nap.

In their defense, AIG’s management team explained that they asked employees last year to go without their bonuses, and the employees said, take a hike. So AIG execs were helpless. They had to pay out those bonuses. I’m sure they are angry about it.

As for politicians, I’ve seen news stories saying the feds knew for months that bonuses would be paid, and others saying they were caught by surprise. Whatever. I just want to know what they’re going to do now, other than be really, really angry about it.

Chaos and Opportunity

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Seems to me the outrage over the AIG bonuses presents an opportunity. If the feds are ever going to nationalize failing financial institutions, now would be the time to do it. The public will understand.

Unfortunately, what this episode shows us is that the Obama Administration is being much too cautious — or much too something — in dealing with the financial crisis. Let us not be weenies, Mr. President. Although the President may be, as Glenn says, “sounding the right note,” talk ain’t gonna cut it.

See also the Talking Dog and Balkinization.

Nothing’s Too Big to Fail

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AIG execs don’t want to talk about the bonuses they continue to pay themselves, but they did release a list of the banks and financial institutions that received federal bailout money through AIG. This is, I assume, their way of saying they are putting most of the money to good use.

Still, what about those bonuses? Robert Reich said,

Had AIG gone into chapter 11 bankruptcy or been liquidated, as it would have without government aid, no bonuses would ever be paid; indeed, AIG’s executives would have long ago been on the street. And any mention of the word “talent” in the same sentence as “AIG” or “credit default swaps” would be laughable if it laughing weren’t already so expensive.

More significantly,

Apart from AIG’s sophistry is a much larger point. This sordid story of government helplessness in the face of massive taxpayer commitments illustrates better than anything to date why the government should take over any institution that’s “too big to fail” and which has cost taxpayers dearly. Such institutions are no longer within the capitalist system because they are no longer accountable to the market. So to whom should they be accountable? When taxpayers have put up, and essentially own, a large portion of their assets, AIG and other behemoths should be accountable to taxpayers. When our very own Secretary of the Treasury cannot make stick his decision that AIG’s bonuses should not be paid, only one conclusion can be drawn: AIG is accountable to no one. Our democracy is seriously broken.

Put another way, AIG already has failed. The question in front of us is not whether AIG should be “allowed” to fail, but what role government should play in softening the broad economic fallout of the failure. It’s not about rescuing AIG, but about rescuing everybody else. It may be that propping up AIG somehow is a sensible move, but the execs who took it into failure need either to be removed or made to understand that they are no longer in charge, and everything they do is now open to public scrutiny.

There is talk of a “bailout backlash.” Showing the AIG execs the door would be a hugely popular move right now, I think, and would reassure the public — well, that part of the public that thinks, as opposed to the brainless part — that the Obama Administration isn’t just throwing good money after bad.

Paul Krugman has some interesting comments about the financial crisis in Europe. In a nutshell, Europe is facing the same financial meltdown, but it’s doing even less than we are to deal with it.

Europe’s economic and monetary integration has run too far ahead of its political institutions. The economies of Europe’s many nations are almost as tightly linked as the economies of America’s many states — and most of Europe shares a common currency. But unlike America, Europe doesn’t have the kind of continentwide institutions needed to deal with a continentwide crisis.

This is a major reason for the lack of fiscal action: there’s no government in a position to take responsibility for the European economy as a whole. What Europe has, instead, are national governments, each of which is reluctant to run up large debts to finance a stimulus that will convey many if not most of its benefits to voters in other countries.

Strictly speaking, Europe is not a confederacy, but in some ways it acts like one. Confederacies of sovereign states have a long track record of quickly crumbling apart. Sometimes “big government” is a big advantage.

Update: Josh Marshall writes,

What’s really driving this forward — and what makes it such a dangerous moment for the White House — is the jarring image of the administration’s impotence.

Secretary Geithner found out about the bonuses. He told AIG CEO Edward Liddy it wouldn’t fly. And Liddy, in a curiously imperial letter, tells Geithner that much as he is pained by the situation — to blow it out his ass. Which he apparently proceeded to do.

I think the Obama Administration needs to take this situation in hand before public support for the President’s economic policies melts away.

Health Care Scare

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Ezra Klein talks about “zombie lies that will not die.” He links to a ridiculous Bloomberg article by Amity Shlaes, who raises the dreadful specter of “government-run health care,” which I assume is a system in which heartless government bureaucrats decide what medical treatments you will receive. This would be a huge departure from our current system, in which heartless insurance company employees decide what medical treatments you will receive.

Shlaes writes,

The administration seems almost to relish the sinister aspect of government-run health care. Otherwise it wouldn’t have created a position called “National Coordinator of Health Information Technology.” That’s a title worthy of Rhineheart, Neo’s boss, who tells him, “This company is one of the top software companies in the world because every single employee understands that they are part of a whole.”

Ezra writes,

This idea that the stimulus bill “created a position” called “National Coordinator of Health Information Technology” got its start in another Bloomberg column written by Betsy McCaughey. She called the National Coordinator of Health Information Technology a “new bureaucracy.”

But this just isn’t true. It’s not sort of true or arguably true or caught in arguments about the nature of truth. George W. Bush created the position of National Coordinator of Health Information Technology in 2004. Five years ago. The current director of the office is a Bush appointee by the name of Robert Kolodner. He has served there since 2006. He exists. If you prick him, he will bleed. If you touch him, he will recoil, because he is subject to our laws of space and time and as such was not somehow created by President Obama back when George W. Bush occupied the Oval Office.

What passes for “opinion” in wingnut world comes from the Pan’s Labyrinth dreamworld they live in. Don’t even try to make sense of it.

Elsewhere in Bloomberg News, John F. Wasik writes a nice piece about single-payer.

In a “Medicare-for-all” program, care would be publicly financed and privately delivered. You would keep your own health- care providers and hospital. The government wouldn’t dictate who your doctor is or choose your hospital. It would be acting more like a huge purchaser bargaining for the best treatment and drugs at the lowest price. …

…There would be a national market and regulation for health policies and no one could be denied affordable coverage. No more “cherry-picking” of only the healthiest people and rejection of the sickest or those with chronic conditions.

Wow, think of that.

Of course, even if their ideas are absurd, the fact that the Right is proposing changes means that we’ve progressed from the position they held as recently as the 1990s, and probably into the 2000s, which was that the health care system we have is just fine the way it is, and if it ain’t broke, don’t fix it. I believe George H.W. Bush used those very words in his re-election campaign against Bill Clinton.

With wingnuts, things have to get this bad before they acknowledge there’s a problem. On the other hand, they are grand at making up phantom problems (e.g., Saddam Hussein is going to nuke us) and flogging them ceaselessly. But real problems are uninteresting to them.

In other words, they get worked up over imaginary monsters under the bed and don’t notice the roof is coming off the house.

That’s why Tom Friedman shouldn’t be surprised. He writes today about the financial crisis:

Friends, this is not a test. Economically, this is the big one. This is August 1914. This is the morning after Pearl Harbor. This is 9/12. …

… Yet I read that we’re actually holding up dozens of key appointments at the Treasury Department because we are worried whether someone paid Social Security taxes on a nanny hired 20 years ago at $5 an hour. That’s insane. It’s as if our financial house is burning down but we won’t let the Fire Department open the hydrant until it assures us that there isn’t too much chlorine in the water. Hello?

See also Paul Krugman, “Can America Be Saved?”

Shifting Ground?

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At Tapscott’s Copy Desk, DC Examiner, we find “Obama is in trouble.”

Did you feel it? The political ground shifting beneath President Barack Obama since his speech last week to Congress? It’s been downhill since and I’m not referring mainly to the Dow Jones record-setting dive. The pivot point of the shift was the speech, or rather what the speech did to the evolving public narrative of Obama.

The “evolving public narrative,” one learns, is going on entirely on right-wing public radio and Faux Nooz. Rush Limbaugh and Glenn Beck are on fire, apparently. Further, “a potentially devastating conservative case against Obama is coming together rapidly.” Wow! This could be troublesome. But yes, two columns “tell the tale.” They are:

Daniel Henninger at the Wall Street Journal:

The Republicans have been handed on a tarnished silver platter the chance to offer the American people an alternative vision of how their economy works — and grows.

They should take political ownership of the 75% of the U.S. economy that the Democrats have abandoned — the private economy.

Hello?

Over the past four decades and the decline of private-sector industrial unions, professional Democrats — politicians, intellectuals like Robert & Robert, campaign professionals, unions and satellite groups — have severed their emotional and intellectual connection with private production.

Wow, that’s so — nonsensical. OK, so what’s the other column? Why, it’s Charles Krauthammer! The same column I cited in my last post! Let’s look at Tapscott’s synopsis Krauthhammer:

Obama’s mastery of public speaking has heretofore served to deflect attention away from the details of what he is actually proposing. And there is in those details, according to Krauthammer, a fundamental deception: Obama summons visions of catastrophe that are the result of too little government regulation of the financial markets and he offers as a solution vastly more government regulation of …. health care, energy and education.

Krauthhammer and Tapscott are saying that Obama is deceiving the public by claiming the financial meltdown is the result of deregulation of financial markets and offering as the solution more regulation of health care, energy and education. Tapscott continues,

In other words, Krauthammer said, Obama tries to have it both ways, with the alleged errors of deregulation being compounded into the worst economic crisis since the Great Depression by America’s failure to nationalize health care, shift our economy to alternative energy sources and give everybody a free pass to college. Obama is trying to make the cause and the cure synonymous. “Clever politics, but intellectually dishonest to the core,” Krauthammer said.

I read this three times to try to see where Obama’s dishonesty lies, and it eludes me. Of course, like most righties Tapscott and Krauthammer cannot so much as breathe without being intellectually dishonest about it. For example, they are being intellectually dishonest when they say Obama’s solution is more regulation of health care, energy and education. Some regulation is needed, but even more important is more investment in health care, energy and education.

And what’s with the “free pass to college”? Exactly where do they get this stuff?

Anyway, like most right-wing arguments, it is based on ideology that is utterly unconnected to anything happening in the real world. People who are already convinced that President Obama is a radical socialist terrorist fist bumper will take this argument to their hearts and repeat it like parrots without knowing what any of it really means. Everyone else will say, “huh?”

Michael Hirsch writes at Newsweek about the shifting ground:

Despite the tumbling economy, Barack Obama continues to enjoy a honeymoon with the American public in the face of the most trying crisis any newly inaugurated president has encountered since Franklin Delano Roosevelt. The GOP, meanwhile, is viewed by a majority of Americans as the party of “no,” without a plan of its own to fix the economy, and even rank-and-file Republicans are concerned about the party’s direction, according to the first NEWSWEEK Poll taken since Obama assumed office. …

… Overall, 58 percent of Americans surveyed approve of the job Obama is doing, while 26 percent disapprove and one in six (16 percent) has no opinion. Although his approval ratings are down from levels seen a few weeks ago in other polls, 72 percent of Americans still say they have a favorable opinion of Obama—a higher rating than he received in NEWSWEEK Polls during the presidential campaign last year. The president’s rating in this poll is consistent with estimates provided by other national media polls in the last week.

Many on the Right also are claiming that Obama owns the nation’s faltering economy, since he’s been POTUS for less than seven weeks and hasn’t fixed it yet. In particular, the Right is seizing the falling stock market as proof that Obama’s economic policies are already failing. Robert Reich explains why this is nonsense. See also Tom Petruno at the Los Angeles Times.

Of course, going back many years we see that righties always claim good economies as theirs and bad economies as belonging to Democrats. In rightie world, the “Reagan Recession” of 1981-1982, which began after St. Ronald of Blessed Memory took office, was Jimmy Carter’s fault. On the other hand, the strong economy of Bill Clinton’s second term was, of course, Saint Ronald’s doing, even though Reagan had been out of office for a decade.

Time has a way of strangely compressing and expanding in the rightie brain.

When Failure Is an Option

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Rush and other mouthpieces for movement conservatism are not backing down from their public wish that Barack Obama fails. As Dave Neiwert says, his excuse for this is the time-honored foundation of all conservative morality — That other kid did it first.

Limbaugh: Did the Democrats want the war in Iraq to fail?

[Crowd shouts:] Yeah!

Limbaugh: Well, they certainly did. And they not only wanted the war in Iraq to fail, they proclaimed it a failure! There’s Dingy Harry Reid, waving a white flag, ‘This war is lost. This war — ‘ They called General Petraeus a liar before he even testified! [Boos.] Mrs. Clinton — [Loud boos] … Said she had to suspend, willingly suspend disbelief for whenever one had to listen to Petraeus. We were in the process of winning the war and the last thing they wanted was to win. They hoped George Bush failed.

Dave’s comment:

It would be one thing if Republicans were simply warning that Obama’s stimulus plans were doomed to failure. We’d understand that. It certainly would mirror how we felt about the Iraq war: we believed it was a doomed enterprise that would not only cost far more in human lives than anything that might possibly be gained from it, but would actually worsen the conditions for terrorism it purportedly meant to combat. We recognized that Bush’s rosy scenarios might come to pass, but we doubted it deeply — and said so, and rightly.

But it’s another thing altogether to openly hope for failure — in the case of the Iraq war, because it meant American soldiers would die needlessly, an outcome no one who loves America would want; and in the case of the economy, because it means that America is doomed to slide into a Depression. It will mean that millions of Americans will lose their jobs, millions will slide into poverty, and misery will be rampant.

Of course, from the moment the invasion of Iraq became public discussion, any arguments against it evoked howls about “Fifth Columnists” and “Cheese-Eating Surrender Monkeys” from the Right. I do not believe most of them see a difference between expressing the opinion that X is a bad idea and wanting X to fail. There’s a huge difference, of course, but I suspect it would be easier to teach algebra to a gerbil than to teach that difference to your standard wingnut. I personally would not want to waste my time trying.

However, it’s also the case that when a wingnut evokes “Iraq” and the rest of us speak of “Iraq,” we’re talking about entirely different things. I go back to my contention that right wingers, like the Tamarians of Star Trek TNG, see everything as part of a vast mythology.

When most people think of the War in Iraq, they see the Mother of All Boondoggles; a hopeless mess that was entered into foolishly, for reasons that proved to be false, and without proper planning, that has wasted billions (at least) of taxpayer dollars, has taken the lives of 4,255 American soldiers (so far), has caused immeasurable stress and hardship for military and reservists’ families, has drastically decreased our military’s ability to respond to other (and possible real this time) crises, has eroded American prestige, has probably increased the risk of another terrorist attack, and has generally pissed off the planet.

When you say “Iraq” to a wingnut, however, out of the misty haze of his brain comes a mythical vision of good versus evil, where the shining forces of righteousness (righties) eternally battle the dark, malevolent Other (everybody else). And victory over the Other is not really about the Middle East or even 9/11. It’s about preserving Christmas and Jesus and gun shows, and the right of white Americans to hear no language but English spoken in the aisles of Wal-Mart. And, of course, conquering the Other requires unwavering faith. To doubt is to embolden the enemy. Through our very brain waves, we doubters gave strength to the Other; and because we refused to clap, the fairy almost died.

For the rest of us, who think somewhat more analytically, if we are accused of wanting the war in Iraq to “fail,” I’d have to ask for clarification. What part of it exactly did we want to “fail”? We on the Left do have a pubescent fringe whose antics are lovingly documented by Michelle Malkin as representative of all of us, but the truth is that Democratic Party leaders and the huge majority of liberal political activists have been supportive of the troops all along, and have not spoken against military victory in Iraq. Nor am I aware of anyone who has opposed democratic elections in Iraq or hoped the government of Iraq would fail and be replaced by a junta of Islamic radicals.

What we’ve opposed, other than the damnfool invasion itself, is the incompetence and corruption. It’s the way the Bush Administration was perpetually six months (at least) behind in responding to ongoing developments. It’s the way billions of taxpayer dollars have been soaked up by corrupt contractors or just plain evaporated. It’s the way the Bush Administration was forever coming up with post-hoc strategies that were more about domestic consumption than real-world application.

Because we actually noticed this stuff, and commented on it out loud, we were not playing by the rules of rightie myth. “Winning” requires us all to shut our eyes, keep visions of John Wayne at Iwo Jima in our heads, and to speak only of honor, glory and resolve.

On the other hand, if President Obama’s stimulus programs fail, we and much of the rest of the planet will be plunged into another Great Depression. We might end up there, anyway, for policies that are too little and too late. But not acting pretty much guarantees it.

Now, it may be that righties really don’t want another Great Depression, any more than I supported Saddam Hussein or wanted Iraq to collapse into a failed state. (Note to wingnuts: I didn’t, and I didn’t.) They just don’t comprehend that we’ll end up there if we don’t get currency moving through peoples’ hands again, and fast. Whether they don’t understand this because they’re blinkered by ideology or just plain stupid, I’ll let you decide. The fact is that the Right hasn’t come up with a alternative plan beyond oh, let’s just keep doing what we’ve been doing, which is what got us into this mess. Not an option.

Then you’ve got the faction (most righties, I suspect) who sincerely believe Barack Obama is an agent of totalitarian socialism who is trying to undermine republican government and turn the U.S. into a gulag. These are the same people who are insulted if you call them “John Birchers,” mind you.

If one really believes this, then I suppose it would be one’s patriotic duty to want Barack Obama to fail. I would argue it’s their patriotic duty to get professional help.

Update: See John Cole.