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Oh. My. God. Obama Clueless
I'm with Simon Johnson here: how is it possible, at this late date, for Obama to be this clueless?
The lead story on Bloomberg right now contains excerpts from an interview with Business Week which tells us:
President Barack Obama said he doesn't "begrudge" the $17 million bonus awarded to JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon or the $9 million issued to Goldman Sachs Group Inc. CEO Lloyd Blankfein, noting that some athletes take home more pay.
The president, speaking in an interview, said in response to a question that while $17 million is "an extraordinary amount of money" for Main Street, "there are some baseball players who are making more than that and don't get to the World Series either, so I'm shocked by that as well."
"I know both those guys; they are very savvy businessmen," Obama said in the interview yesterday in the Oval Office with Bloomberg BusinessWeek, which will appear on newsstands Friday. "I, like most of the American people, don't begrudge people success or wealth. That is part of the free- market system."
Obama sought to combat perceptions that his administration is anti-business and trumpeted the influence corporate leaders have had on his economic policies. He plans to reiterate that message when he speaks to the Business Roundtable, which represents the heads of many of the biggest U.S. companies, on Feb. 24 in Washington.
Oh. My. God.
First of all, to my knowledge, irresponsible behavior by baseball players hasn't brought the world economy to the brink of collapse and cost millions of innocent Americans their jobs and/or houses.
And more specifically, not only has the financial industry has been bailed out with taxpayer commitments; it continues to rely on a taxpayer backstop for its stability. Don't take it from me, take it from the rating agencies:
The planned overhaul of US financial rules prompted Standard & Poor's to warn on Tuesday it might downgrade the credit ratings of Citigroup and Bank of America on concerns that the shake-up would make it less likely that the banks would be bailed out by US taxpayers if they ran into trouble again.
The point is that these bank executives are not free agents who are earning big bucks in fair competition; they run companies that are essentially wards of the state. There's good reason to feel outraged at the growing appearance that we're running a system of lemon socialism, in which losses are public but gains are private. And at the very least, you would think that Obama would understand the importance of acknowledging public anger over what's happening.
But no. If the Bloomberg story is to be believed, Obama thinks his key to electoral success is to trumpet "the influence corporate leaders have had on his economic policies."
We're doomed.
228 Comments so far
Show AllI'm critical of Krugman at times for his political and MSM talking point correctness, but this time he hit the mark in his bluntness.
Don't be bothered. The US dollar will be about as useful as Monopoly money soon.
I got an extra wheel-barrow just in case.
NO, no, no. It's very unlikely that the dollar will fall precipitously. A great many other bad things may (probably will) happen, but not hyper inflation.
Yup, instead of a gallon of gasoline costing $450.00 the pumps will just go dry after it hits $150.00 a gallon.
Hyper-deflation, not inflation. Inflation requires growth; sorry not in the cards. All assets are overpriced by 30%-40%. Prices will crash. It will be ugly.
The latest edition of Monopoly no-longer uses paper money, but instead uses an electronic credit system. I guess this means that we are already there.
"We're doomed!" -- Paul Krugman
I thought I was going to be reading another apologetic op-ed from Krugman, but NOT so, although he does throw in an IF -- as to whether the Bloomberg story is true.
What's left to say?
Exactly, when Paul K. says we're doomed, something really bad must have already happened. Better late than never I guess.
Bankers should be highly regulated by the state because they are merely distributors of a state monopoly product: currency. When they are allowed to own brokerages and insurance companies, they are obtaining control over the demand and supply of their monopoly distributorship. All forms of rent, fees, and interest are burdens on the economy and their result is foregone production in the real economy.
To fix our economic morass, Obama should move with or without congressional approval to close the Federal Reserve and restore the Bank of the United States, operating under the Treasury Department. Private banking could not compete and would wither like the fair weather weed it is.
"Look, taxpayers, I do not begrudge the banksters for stealing so much of your money, because I helped them do it and they helped finance my campaign so they deserve it."
Spot on and tragically humorous kivals!!!
Jeevee
That's telling the truth.
As the article states, Barack Obama is a fierce advocate of the free market system, a system in which regulations are to be spurned in the belief that the "free market" will somehow correct itself. Contrast this approach with the countries on the continent of Europe where, as Steven Hill points out in his well written book Europe's Promise: Why The European Way Is The Best Hope In An Insecure Age, their system of social capitalism makes sure that its citizens will benefit from so many of the works supports that are in place throughout Europe. As an example, in countries like Germany and France, their private insurance companies are, unlike in the United States, non-profit [unlike in the U.S., that means tight regulations for those insurance companies] which then means that there are no "in-network" or "pre-authorization" issues for people to deal with.
Good post Errol. Steven Hill wrote another book as well "ten steps to repair American democracy" that is great. Many folks find this sort of nuts and bolts stuff boring, but it is of the utmost importance.
Jeremy Rifkin wrote a book several years ago "The European Dream" where he makes some good points. Also TR Reid's "The United States of Europe" is decent as well.
The European model is not without faults and the neo-liberal/laissez faire crowd has influence there as well; however it is hard to argue that many of their policies are far more sustainable and fair, to be sure.
Socialist
Your suggestions for those other books would appear to be worth checking out. Your mentioning of the influence of the neo-liberal/laissez faire crowd still in Europe is quite ironic as Steven Hill, in his preface to his book Europe's Promise, quotes French president Nicolas Sarkozy [who is not exactly a raging leftist] in a speech that he had given about a couple of years ago, stating:
"Laissez-faire is finished. The all-powerful market that always knows best is finished. Self-regulation as a way of solving all problems is finished."
At a two-day summit to discuss the economic crisis that was occurring in January of 2009, conservative German chancellor Angela Merker echoed Sarkozy's comments when she declared in a speech that the days of laissez-faire are now a thing of the past. Europe seems to recognize that it can implement beneficial policies much easier by working together as members of the European Union than America's constant use of bullying other nations into thinking that the only way for things to work is to adopt America's less than efficient rules. But as Europeans have discovered, America's policies basically have no place in countries which, as opposed to the United States, truly do practice and carry out family values.
Yes, conservative political leaders (Merkel, Sarkozy) if in the US political spectrum would be considered leftists.
We must remember that ol Sarko is a politician and that he is bending with the wind a bit. Shortly after he came to office he proposed legislation that would have taken away worker protections for workers 18-26 years old, in order to make the labor force "more flexible". There were huge demonstrations, wildcat strikes and walkouts etc. and the legislation was abandoned. Given the ornganized resistance and recent events, he is forced to change his stance a bit.
Now the ECB, the European Commission and EU-based multinationals are another matter. Folks like JC Trichet, Pascal Lamy, Bernard Kouchner et al.; and companies like Nestle, Unilever, BP, Shell, Deutsche Bank, Total-Fina, Vivendi etc. are not without criticism.
With that caveat, overall I wholeheartedly agree that the EU model, (called Kantian by some) is far superior and more transformative than the US (some call Lockean, some call Hobbesian) model is an utter failure.
I lived and worked in the EU for 6 years until 2008 and I loved every minute of it. I paid more taxes there, however my health care, funded pension I did not pay a eurocent extra for, I had 6 weeks PAID vacation, and many other perks and consumer protections. If it were not for family obligations I would have never come back to the USA
Thanks to a strong labor movement in Europe and a much stronger class consciousness among the public, than here in the US (almost nonexistent).
Not only that but for the most part these Exec.'s are nothing but stuffed shits. Probably any run-of-the-mill idiot or dull MBA could do the job with a couple of weeks training and the right hairstylist. You know what happens when they get a flat tire or their wives ask them to take out the garbage? There's probably not a single one of them that doesn't owe their position to "family connection". Their whole qualification amounts to nothing more than hereditary impunity.
And did you hear Michelle tick off the "simple, easy steps" she took to "combat obesity", not really amounting to "a change in lifestyle" in her own children? This is called "living in La-La land".
My comment has always been that it is difficult to tell the difference between the "results" these guys manage and pure, dumb luck. Throwing darts would probably yield the same results. So, why do they deserve these monster rewards?
But Paul, Wall Street threatened to spank the Democrats by running to the Republicans with campaign money if there was any more talk about taxing excess profits. What else was Obama to do? So he redefined the profits as not being excessive. Of course the poor guy's caught between a rock and a hard place. Just because he's not outraged any more doesn't mean the voters aren't.
Makes me think of that line: When you tell the truth you don't have to remember what you said. We may be doomed but it would be comical if it weren't such a tragedy on Main Street. People losing their homes and their shirts while Obama suddenly has no problem with this massive shift of national wealth to the top. What a guy.
Curtis, you may be right. It happened in Brazil.
When the people fear their government there is tyranny,
when the government fears the people there is liberty.
~ Thomas Jefferson
good point
Which one, Greg? You just said hyperinflation can't happen here.
When the people fear their government there is tyranny,
when the government fears the people there is liberty.
~ Thomas Jefferson
I agree with everything you said up until "Curtis, you may be right." Feeling that we are "doomed" has nothing to do with inflation. We could more easily have a long stagnation of deflation. When will the jobs come back? It is very difficult to get a severe case of inflation started if lots of people have little or no work or money. You must have people with money to chase the price of goods higher. I especially agree with you that Obama may well be worried that Wall Street may shift to massive funding of Republicans.
Actually it's quite easy to get a very serious case of inflation. Cut taxes, raise the debt limit and borrow, borrow and borrow some more. Argentina did it in the late 70s early 80s and by printing lots of money to pay for its government services, but as they did not tax the rich to get that money, their economy crashed. Their middle class was wiped out and has not recovered from that neocon wet dream. Zimbabwe has done a similar thing. Printing paper and calling it money doesn't really make that paper valuable. What makes the paper valuable is that people believe that they'll be able to get something for that bit of paper. (There's a bit more to it than that, but basically that's economics.)
The usa has been printing lots of paper and calling it money for years now. The thing that backs the value of that paper is that the paper is used to buy/sell oil on the world market. Otherwise, you don't really produce too much other than weapons, and bits of paper...
Iraq threatened to trade in something other than dollars, you went to war with them.
Iran is threatening to trade oil in Euros, you're threating war with them.
Russia is trading natural gas in Euros (I might be mistaken) but they have nukes and you're not threatening them...
If we keep taxes low and keep spending and spending, the time could come when inflation would pick up some real steam. But, we're not anywhere close to that now. Look at the 10 year interest rates. No one with money is worried about serious inflation problems in America's future. Admittedly, I do worry that the average Joe loves the idea of getting something for nothing and we may have serious trouble reigning in the budget deficit in the future, but I think there is a reasonable chance that the majority will get it right.
You're a heck of a lot closer than you may think. Not only will you owe something like 12 trillion in debt after this year, but the dems and repubs have no real plans to cut the spending that is out of any sort of control. Neither party is going to cut the military, even tho the money you spend on that has not prevented any attack on the usa, nor has it been able to defeat a bunch of poorly armed insurgents in Iraq or Afghanistan. In Iraq, the us gov't has paid off the insurgents and in exchange for money they're not attacking (much) anymore. In Afghanistan...
But that 12 trillion figure that people are talking about doesn't include the money that is owed but for which there is no source of funding identified. That's the Social Security money, it's the money for medicare. But that's not all! No, when you add the state debt, the civic debt, the household debt, debt owed by business you get the happy figure of nearly 55 Trillion dollars. That's 177k per person in the usa.
If the people with money are not worried about inflation, you have to ask 'why the heck not?'
Since the days of Reagan you've been getting something for nothing. Eventually the above debt will have to be paid, or written off. If it's written off, your government will never again be able to raise money except by taxing people directly. Not to mention you'll risk your creditors not being willing to write off the money that is owed to them and they'll decide to take the money, or goods in lieu of payment, by force.
If you pay it, you'll need to hike taxes to the levels not seen since FDR. If you try to pay it off by inflating the debt, you'll still risk war, and you'll impoverish all but the extremely rich.
Krugman is right. You're doomed.
I'm not a bit worried about Social Security. With a few adjustments we will manage. Medicare is a BIG problem. Some of the debt you speak of will have to be written off. Debts have always been written off. It doesn't necessarily mean disaster. Some may (hopefully) disappear as the economy gets a little stronger and asset values rise somewhat from their lows.
Debts owed by business and by individuals can be written off with minor trouble. But if too much debt is written off than the banks are going to be in even more trouble than they are now in. If too many people go bankrupt, the banks will also go bust.
That's not the case with national debts. Think of Haiti and the impossible debt the French levied on them and the effects that that debt had on the people of that country. Think also of the former Russian Empire's debts that the Soviets repudiated when they pulled their 'new' 'worker's paradise' out of WWI; something that was never forgotten nor forgiven by the other nations. Think of how the IMF intervenes in countries that they consider 'fiscally' irresponsible. You're already over the debt limits that are forced on other nations, it's tolerable because you have a history of paying your bills (although you did have trouble with the bills owed just after your revolution didn't you?).
If the usa were to 'get away' with repudiating its national debt, then why would any other poorer nation not also be able to 'get away' with the same behaviour? National debts are rarely written off, usually it only happens if the nation is wiped from the face of the earth. I don't think the Confederacy was 'forced' to pay the debts that Davis ran up during the 1860s, but they were never a 'real' nation either. Even if a nation is wiped from the face of the earth, the debts racked up by them can be levied against the nation that emerges from its ashes. The Germans were forced to pay for the debts of the Nazis, although I don't know if they had to pay the value of the national bonds issued by the nazi state. (I'd be surprised if they did)
Here are figures from 2007 for debt as a % of GDP: Japan-170%, Italy-110%, US-60%. Our debts aren't anywhere near as bad as Japan's, and they have no problem with inflation. US debt was much worse after WW2 and we worked through that quite nicely. There is NO need to assume gloom n doom. Sure, it could happen, but probably not.
"When will the jobs come back?"
When American workers are willing to work for Bangladeshi wages.
When American Citizens restore their Sovereignty and stop needing to compete with Bangladeshi workers, you mean.
That's bunk.
If Obama used his bully pulpit for the next two years to:
a) Promote Populist Legislation and Executive actions.
b) Hold any Government or Big Business person against this feet to the fire.
He wouldn't NEED all that precious money from the Corporacrats!
The Corporacrats haven't seized power because there is nothing that can be done by Obama or the 111th Congress to stop them, they've seized power because Obama and the Dems are either too cowardly or too corrupt to dare try and stop them!
You remember FDR, right?
The guy elected to 4 consecutive terms as President?
The guy who is still so popular with the people that the sheer inertia of his popularity is half of what keeps the Dem party alive?
Now, what was HIS stance in re Populist measures and the bully pulpit?
If the Dems had any guts (or loyalty to the People) at all, Corporations and big money men wouldn't have either A) the vault-loads of money or B) the right to use that money to effect a campaign, by 2012!
-matti.
Be still, my heart! Geez, Krugman finally writes something that doesn't push my buttons.
So I forbear the usual rant about what an overrated, time-serving hack Krugman is.
Instead, for a change I'll only observe that even a blind pig roots up an acorn now and then.
· Yr Obd't Servant
I don't share your opinion of Dr Krugman, whose writing I find educational and entertaining. But I'm puzzled as to why you would continue to read the works of a blind pig.
I love your response, maxclover. Thanks for the laugh!
Kathy
When the people fear their government there is tyranny,
when the government fears the people there is liberty.
~ Thomas Jefferson
Maybe he spends a lot of time hanging out IN a blind pig.That might explain it.
I don't "read the works" of Krugman; I glance at his articles here and elsewhere even though the smell usually makes my eyes water.
As with many of the liberal-lite orthodoxy published here, sampling their output is mostly a matter of confirming the paucity of their insights. It's a recreation similar to beachcombing, I imagine.
Hope this clears up your puzzlement. Unless, of course, it is fake puzzlement to set up a "gotcha!" by further exposing me as a duplicitous hypocrite for daring to put down Krugman without even bothering to acquaint myself with his oeuvre.
· Yr Obd't Servant
I just LOVE when folks are too "slapped-down" to even ATTEMPT to come backatcha, Servant!
Obama stabs his base in the back about once a day. Yet as far as I can see, millions of Dem rank and filers, continue to sniff the Obama pixie dust. They continue to rationalize away Obama's full-tilt, frontal assault on every progressive value and intiative. And of course when Palin runs in 2012, they'll say, "we have to vote for Obama. He's better than her!".
Well I guess I would rather be executed by a clean head shot than tortured to death by medieval inquisitors...other than that, the differences are getting harder and harder to identify.
If there's a supreme court opening, a democrat will give us a justice with some sense of fairness for the average person. A republican will not. To my mind this is huge. So I accept the daily continuing slaps in the face from Obama, and say, Thank you sir, may I have another?"
Obama is a politician. And like all politicians, you should ignore his words and observe his actions. When you judge him on his actions, Obama is clearly a conservative. When he picks replacements for the two liberal justices likely to retire, his choices will more than likely solidify the conservative grip on the court. These are the "Good Ole Days." Things will get worse.
Bullsh*t. He'll give us another reasonable person like Sotomayor. He won't give us someone as liberal as you would like, but c'mon, nobody will do that in our lifetimes.
And the fact that "no one will do that in our lifetimes" is, of course, completely unconnected to the fact that SOOO many people keep saying such things, right?
The primary meaning of 'begrudge' is 'to envy;' and secondarily 'to allow.'
OK, no need to begrudge.
But that doesn't mean you can't DECRY!
It is kind of amazing that obama would be so "clueless" as to actually admit this. I'm impressed that he can say completely opposite things to different audiences and expect that word won't get back to the people being lied to.
Thieves found out a long time ago that the best way to steal something is right out in the open, walk right by the cash registers with your booty, chuckle and say "this is heavier than I thought!" Obama clueless? Yeah, right.
Today, of course, stores now have electronic methods. Too bad We the People don't have anything comparable.
He wrote this on his blog. We shall see if these same sentiments are allowed to be printed in the Times.
I personally don't care if Mr. Obama begrudges it or not. I do believe the practice should be dis-incentivised, and could be very simply if Mr. Obama wasn't a coward or hadn't already chosen his side!
In any legitimate scenario, bankers do not create wealth. They convert it from the sweat of your labor to their pockets. They should be operating on a fee based system with normal salaries for some combination of their knowledge and effort. So why should they adopt a fee based system for each transaction instead of taking "haircuts", (adding their graft onto the value of what must be financed) based on the value of the transaction? A fee based system would be more fair for everyone.
Our present system where the rich keep all their money and the poor and middle class pay all the bills is backwards. A large part of this problem is a result of our currently skewed tax system that tops out at 34%. If we really wanted to stop this wealth-without-work (to co-opt the Chinese saying) we would restore the tax rates from the Eisenhower era that topped out at 90% for income over millions of dollars. Sure those people complained (Ronald Reagan is my favorite example) about that maximum rate, but they were still the richest cry babies on their blocks!
We must enact an instant 50% or more tax on bonuses valued at over an annual poverty level wage. This would be on top of restoring the highly progressive structure that taxes family income over 250K/year at 40%, 500K/year at 60%, 750K/year at 80% and over $1M/year at 90%. Then banks and other such institutions wouldn't be so free and loose with OPM, and the egregious bonuses will go away.
Look, it is this simple:
You and I can not regulate banks, insurance companies or other large corporations, because we all have day jobs. (Even if you reading this are a regulator, you have a finite window where you operate, and it takes many of you folks to impose the requisite regulation on corporations. We need more regulation not less. Take notes republicans!)
We need this regulation to maintain and improve our quality of life.
Government must provide this regulatory service collectively for all of us, as over and over again it has been proven that self regulation does NOT work. Let me paraphrase that in case you didn't catch it: SELF REGULATION OF INDUSTRY IS NOT IN THE PUBLIC INTEREST, as it never works. If anyone doesn't understand or agree with this premise, there are plenty CDers who can help you grok this, and I'll be the first to start, after you first show your @$$ here in response.
Providing regulatory services for our society cost money, and this money must come from either tax revenue or borrowing (The latter of which costs us more money in the end, ...sometimes literally, ...that end!).
Large lump sum payouts of 300 or 900 times an ANNUAL poverty level wage is an immoral miscarriage of justice and fairness, especially in light of how hard these folks "worked" to "earn" this bonus on TOP of a salary that is already hundreds of times the poverty level.
There is no way to fix our problems without paying our own way and incentivizing correct behavior. Punitively if necessary.
Here's your chance.
These guys are smart, though. They will get their pay in stock, wait until an appropriate time, sell it all and stash the money in accounts not visible to the IRS. They can hire any number of accountants, police, deceivers of every stripe to protect their interests. Hell, they already have a Supreme Court majority representing their interests. When will they contest a 90% tax rate on their "earnings" as confiscatory and prejudicial to the class of people to which they belong--and win? Two months after a bill is passed by Congress and signed by the President, that's when.