This comes via Gallup:

The latest Gallup Daily tracking results show 49% of Americans approving of the job Barack Obama is doing as president, putting him below the majority approval level for the first time in his presidency.

Although the current decline below 50% has symbolic significance, most of the recent decline in support for Obama occurred in July and August. He began July at 60% approval. The ongoing, contentious debate over national healthcare reform has likely served as a drag on his public support, as have continuing economic problems. Americans are also concerned about the Obama administration’s reliance on government spending to solve the nation’s problems and the growing federal budget deficit. Since September, Obama’s approval rating had been holding in the low 50s and, although it has reached 50% numerous times, it had never dropped below 50% until now.

Of the post-World War II presidents, Obama now is the fourth fastest to drop below the majority approval level, doing so in his 10th month on the job. Gerald Ford dropped below 50% approval during his third month in office, and Bill Clinton did so in his fourth month. Ronald Reagan, like Obama, also dropped below 50% in his 10th month in office, though Reagan’s drop occurred a few days sooner in that month (Nov. 13-16, 1981) than did Obama’s (Nov. 17-19, 2009).

But all presidents except John Kennedy dropped below the majority approval level at some point in their presidencies, and all recovered after the first time below this mark to go back above 50% approval.

The full article is linked below. Good data for political historians.

Obama Job Approval Down to 49% – Gallup

See also It’s [Still] The Economy, Dumbass by Nate Silver and CNN Poll: Blame for recession shifting from GOP to Democrats

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Video embedded below.

See also Democratic Rep. DeFazio Calls for Geithner and Summers to Be Fired – Yves Smith

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This is classic.

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In my recent post about the capture of the Obama Administration by the financial services lobby, I said it was irrelevant whether they were deliberately looking to line the pockets of the banking industry. This is an important point as you decide whether to donate campaign money, how or whether to vote, and who to elect to office in all the upcoming elections.

In our democracy, the ballot box is where you get to act as jury. Campaign contributions is where you get to be the judge. You can convict any incumbent politician of misusing public trust and yielding to monied special interests by withholding your money and voting the individual out of office.

So when you make these decisions, always keep this in mind:

To convict, you don’t need to prove intent, you just need to prove motive.

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You judge for yourself: is Jon Stewart right to skewer Fox? Before you decide, listen to the last minute of the segment.

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The number is zero.  According to a recent Harvard study, two of every three bankruptcies in the US are medical-related. That’s why at least catastrophic coverage for everyone is the real purpose of healthcare reform. Why some Americans don’t understand this is beyond me.

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• Now watch this drive

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You probably have heard about the Saturday Night Live skit poking fun at President Obama for allegedly not leaving a very robust list of accomplishments behind after 9 months in office.  So, without further ado, here it is.

NPR says:

"If Saturday Night Live is a barometer of what the left is thinking, then liberal President Barack Obama has some problems."

By the way, it has been fact checked too. Link below.

http://www.politifact.com/truth-o-meter/article/2009/oct/05/saturday-night-live-obama-campaign-promises/

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The most newsworthy item in this clip is Emanuel saying that the healthcare bill cannot pass the Senate with a public option. Along those lines reports are now coming out that the Obama Administration is negotiating with Senator Olympia Snowe (R-ME) to use a watered-down ‘public-option trigger’ which she has said she will support. The White House has denied these reports.

Likely we will see either a trigger mechanism or an insurance co-op.

Here’s the Emanuel clip from Charlie Rose.

(Video embedded below. If you experience a problem, use this link instead.)

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At issue here is the news that the Obama Administration dropped plans to force financial institutions to offer “plain vanilla” financial products that are simple enough for consumers to understand. My headline is editorial enough on this issue.  So, rather than editorialize this latest announcement, I’ll quote from the press.

• The beginning of the end of meaningful regulatory reform – Felix Salmon

There’s no good reason for this capitulation, except for the financial lobby has so effectively captured Congress that no reform would be able to get through with such a common-sense provision in place… I fear that by the time Congress is done, the Consumer Financial Protection Agency won’t be able to protect consumers at all — and that’s assuming it’ll even exist.

• White House Pares Its Financial Reform Plan – Deal Book

At a hearing before the House Financial Services Committee, Treasury Secretary Timothy F. Geithner announced that the administration had dropped a provision in its plan for a consumer financial protection agency that would have required banks and other financial services companies to offer so-called “plain vanilla” products, such as 30-year fixed mortgages and low-interest, low-fee credit cards

• White House retreats on key part of proposed financial overhaul – LA Times

A requirement that firms providing financial products offer ‘plain vanilla’ loans and cards is dropped, indicating the Obama administration is willing to accept major revisions to get its plan passed…

On Wednesday, Treasury Secretary Timothy F. Geithner backed down on a key component that has stirred opposition — a requirement that companies providing financial products offer a "plain vanilla" option, such as fixed-rate mortgages or no-frills credit cards.

His retreat came after Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, floated details of his own version of regulatory legislation that eliminated the requirement.

Geithner’s move showed that, just as with healthcare legislation, the administration is willing to accept significant revisions to get its plan passed.

I said my piece in June. Serious reform is not going to be forthcoming – not on healthcare or in financial services. Am I wrong here?  After all, Paul Volcker is singing another tune. Please tell me how you see this.

Update: I found this related item at the FT:

• Merkel urges G20 focus on regulation – FT

Angela Merkel warned fellow world leaders on Thursday not to make the fight against global imbalances the central issue of a meeting of the world’s 20 largest economies, which kicks off in Pittsburgh on Thursday night.

Speaking in Berlin before boarding her flight, Ms Merkel came close to accusing the US and Britain of backtracking on the issues of financial market regulation and global limits on bonuses for bankers by shining the spotlight on the export-oriented economic policies of Germany and China.

“We should not start looking for ersatz issues and forget the topic of financial market regulation,” she said in her clearest comments to date. “We cannot afford to neglect this issue now.”

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Below is a Market Watch video showing what ordinary Germans think heading into the general election.  Right now it’s looking like a right of center government of the CDU/CSU/FDP.  But, it will be down to the wire. Likely, there will be little change in economic policy, regardless of the result.

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Merkel Votes Scarce in Eastern Region – WSJ

German voters shun financial crisis debate – Japan Times

German election roundup – A Fistful of Euros

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Sarah Palin the populist has become Sarah Palin the free trader. In a wide-ranging and well-received speech in Hong Kong, Palin supported a more Libertarian free-market approach, slamming the recent imposition of tariffs on Chinese tires by the Obama Administration.

Palin spoke at a closed-door investor forum organized by CLSA in which no media representatives were allowed. While attendees were reportedly impressed with her preparation and command of the facts, Palin only took pre-approved questions.

The New York Times reported:

“The speech was wide-ranging, very balanced, and she beat all expectations,” said Doug A. Coulter, head of private equity in the Asia-Pacific region for LGT Capital Partners.

“She didn’t sound at all like a far-right-wing conservative. She seemed to be positioning herself as a libertarian or a small-c conservative,” he said, adding that she mentioned both Ronald Reagan and Margaret Thatcher. “She brought up both those names.”…

Melvin Goodé, a regional marketing consultant, thought Mrs. Palin chose Hong Kong because, he said, it was “a place where things happen and where freedom can be expanded upon.”…

Mr. Goodé, an African-American who said he did some campaign polling for President Obama, said Mrs. Palin mentioned President Obama three times on Wednesday.

“And there was nothing derogatory in it, no sleight of hand, and believe me, I was listening for that,” he said, adding that Mrs. Palin referred to Mr. Obama as “our president,” with the emphasis on “our.”

Mr. Goodé, a New Yorker who said he would never vote for Mrs. Palin, said she acquitted herself well.

“They really prepared her well,” he said. “She was articulate and she held her own. I give her credit. They’ve tried to categorize her as not being bright. She’s bright.”

Edward here. Notice how the NY Times story mentions only one attendee’s race. What does Goodé’s being Black have to do with this story? The writer, Mark McDonald, should be condemned for inserting this language as he is obviously trying to spin the story, suggesting that even a black pro-Obama supporter thought well of Palin’s performance. If he’s going to spin it that way, then just say it directly. The way he words it is cringe-worthy.

This speech and others to come should be seen not only as a way for her to earn shed loads of cash, but as a way to position herself to lead the Republican party ahead of the 2012 Presidential election.  It seems that she is re-casting herself as a libertarian to do so. She has already come out against healthcare, positioning her opposition to Obama’s plan as libertarian. Attendees of the CLSA speech report that she spoke about this subject in Hong Kong as well.  However, she also took on the tire tariffs issue, rejecting an inviting populist take on the issue in favor of more free-market rhetoric (for more on the issue see my post “Murder-Suicide in Chimerica”).

Not everyone was impressed.

“She started the speech with the Alaskan fishing industry, which I think is a safe topic for her,” said Suyeon An of RCM Asia Pacific Ltd, who left before Palin stopped talking. “She was avoiding the important economic issues. She tried to talk some about Hong Kong in general, but it was nothing specific. It was a very safe speech, boring I have to say.”

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Tonight we saw a brilliant performance from Barack Obama. It was Obama at his best, using his command of the English language to inspire and connect on a grand stage as only few politicians can. For sceptics like myself, he surprised. For his base, he reaffirmed. For his adversaries he reached out with an open hand but with the credible threat of a clenched fist.  Obama delivered the goods.

And judging from the initial reactions of the American public, I am not alone in this assessment.

• Polls saw a monster jump of 14% in support for his plan.
• The progressives gave him a B.
• Andrew Sullivan called the speech masterful.
• FiveThirtyEight gave it a stand-up triple rating.
• James Fallows called it a first-rate speech.

More reactions here via Andrew Sullivan.

Look, I have said I see this in stark terms. No other advanced society would permit tens of millions of its citizens to live without insurance against a basic 21st century need, which healthcare clearly is.  No other advanced society sees thousands of its workers bankrupted due to health issues. Forget about the politics and posturing. This issue goes to the very core of who we are as a nation and our values as a society.

That was also the message Obama delivered.

Here are some of the basic points the President covered:

1. Obama wants an evolutionary change, not a revolutionary one. The present basic healthcare system will remain. For the majority of Americans, this means there will be no change of doctor or insurance provider.
2. He is strongly in favour of a public option to promote competition and reduce cost.
3. Obama is advocating coverage mandates for everyone like for car insurance.
4. He wants to ban pre-existing condition dropped coverage.
5. The President wants to ban yearly and lifetime spend caps.

A few other thoughts:

• From my perspective, the most important thing Obama did was stay true to his conciliatory self while still somehow projecting the willingness to show the iron fist. He said “I will not waste time” with those playing political games. Misrepresent and we will call you out. My favourite line was when he called Sarah Palin out, saying “it is a lie plain and simple.” Apparently, Obama has learned when to talk tough.
• Obama did an excellent job of throwing enough red meat to progressives while covering all the bases on fiscal responsibility to make it difficult to criticize the outline he gave. He gave lip service to his change agent status by quipping “I will not accept the status quo.”  I suspect the only potentially effective points of attack will be on the lack of specifics or on the feasibility of cost cuts.
• Obama’s line about illegal immigrants caused a bit of an uproar. I don’t have a view here, but it was one of the more negatively received lines – there were boos to the reaction.  See the CNN coverage here.
• Obama threw a bone regarding malpractice insurance into the fray. Smart move.  This was more of a political ploy than a plan to actually do anything, in my opinion. But, it did cover that flank, if just.
• The Republicans overreached.  Sensing a populist backlash against Obama, they really miscalculated in the school lunch speech brouhaha. These missteps were furthered during the speech.  The lack of civility by members of Congress was cringe-worthy. They often refused to stand and clap and one even heckled. This will cost the Republicans politically.  See the picture on Andrew Sullivan’s site.
• The choice of venue was important.  It certainly worked well for Obama, lending him a statesman-like aura and putting him in a large speaking venue where he excels.  It was like a state of the union address with Congress rising to its feet and clapping in orchestrated approval. The contrast to the Republican rebuttal, done from some non-descript room, was enormous.
• The Republican rebuttal was flat. Charles Boustany spoke mostly about costs and the evils of government-run healthcare. It rang hollow because the President’s speech covered those bases fairly well. Boustany was at his best when he gave his four specific proposals on what to do to reform healthcare. He was at his worst in trying to label the President’s plan as government-run healthcare, a claim that seemed at odds with the facts. Yes, he was at a huge disadvantage because of venue. But I’m sorry, he was just not a good public speaker.
• There was some ‘class warfare’ rhetoric which I found distasteful and it also sounds like the plan will be paid for in part through taxes on the wealthy. Moreover, I am no liberal and the big defense of liberalism and big government at the end was a turn-off for me personally. Others will like him for taking a stand. It will certainly help brand him as far left of center.
• The Ted Kennedy story he told was a clear political prop that I felt was somewhat risky. But, it was generally well done.  I liked the ” character of our country” phrase.
• The speech did go on for maybe 5 or 10 minutes too long.

Fallows sums it best:

There will come a time when Barack Obama cannot pull himself out of pinch with a big speech. And obviously we don’t know how this debate will turn out yet. But he hasn’t fallen short on the big-speech front yet. More tomorrow.

Let’s see what kind of legislation comes of this.  If I get video, I will post.  Feel free to comment.

Full text of speech here.

Here is the video:

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I have been arguing for some time that Barack Obama made a crucial tactical error in bailing out the big banks early in his presidency. His actions have left him vulnerable to populist resentment.  In my view, this weakens his credibility and ability to push through other pieces of his legislative agenda and will harm Democrats in the 2010 elections.

Slipping poll numbers

Indeed, Obama has slipped somewhat in opinion polls. Now, some will tell you that it is because Obama is running a socialist left-wing big government agenda in a center-right country. And as a result, he is losing independent voters. But, is that really true? 

While conservatives are opposed to the Democrats’ health care initiatives as an expansion of the state, progressives are identifiably more opposed to a greater number of Obama legislative issues (willingness to abandon the public option, escalation of war in Afghanistan, and continuation of rendition to name a few).

Bailouts poisoned the well

I would argue that it is the apparent ineffectiveness and unfairness of Obama’s policy initiatives on banks and the economy which has angered middle class Americans – conservatives and liberals alike. The economy is still in the tank despite incipient signs of a technical recovery. And Americans understand that banks and bank staff are making lots of money while thousands lose job and home.

Why then would you trust government? More likely, you would see government as the problem? Most people are not ideological and have no opinion about the role of government except when things are not going well. In my view, this is a major reason why so many are sceptical about changing healthcare. Barry Ritholtz gave voice to this sentiment in a post earlier today.

A problem of substance and style

However, I want to take this one step further because the problem is as much style as substance.  Today, we are to hear Obama’s much-anticipated speech on healthcare reform.  Some feel this is a make-or-break speech for the President. I look forward to hearing his ideas.  But, I don’t expect to hear anything new and I suspect many others feel the same way. Has Obama’s charm worn off?  In some ways, yes.

I have tried to put my finger on it in previous posts, and I think Barry did a fine job in describing the connection between the disgust over bailouts and  Obama’s difficulty with healthcare.  But, there was something missing for me until I saw Yves Smith’s last post on debtor’s revolt. The woman in the video calling for a debtor’s strike made a passing reference to the bailouts which made clear to me her anger that a bank could charge her 30% interest when that same bank wouldn’t exist except through taxpayer largesse.

And that’s when it hit me: it’s the Obama as Bush Three meme. Look at these two videos below. I have some words afterwards.

George W. Bush video

Barack Obama video

As I see it, the man in video number one shows extreme callousness when switching abruptly from a serious discourse about war to a game of golf, generally considered the sport of the wealthy. If one wants a defining moment for the failure of George W. Bush’s presidency, there it is.

Fast forward to August 2009 and we see an eerily similar circumstance.  The economy is still in tatters and Americans are at verbal war over health care. Yet, the President of the United States is off playing golf. Why anyone in the White House thinks this is a good idea is beyond me. It certainly appears to be more of the same – and that is in striking contrast to the pre-inauguration image Obama enjoyed.

I was struck by the fact that Obama was golfing during his vacation two weeks ago as his legislative agenda was falling apart.  So this is the image that I will have in my head as I listen to the President tell us why his legislative agenda is the right one for America.

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While I have come down hard on some aspects of Barack Obama’s legislative agenda, I have not been painting him with a Hitler moustache or accusing him of socialism, that great evil practised only in cheese-loving France.  So I was disappointed to learn how vociferously some were shouting down the President’s back-to-school speech.

The shouts of Fascism in the direction of the President are laughable. Can we please have a reasoned political debate without throwing in meaningless historical references?

So, here it is below in all it’s glory – Barack Hussein Obama’s back-to-school speech.

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School Daze and And while we’re on the subject … – Cartoons in Scranton Times-Tribune

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Senator Ted Kennedy died last night after a year’s battle with cancer. However one might feel about his politics, one must admit that Ted Kennedy had a remarkable life, one that is celebrated in the video clip below.

No related posts.

The bailouts, deficit spending, and debate over health care are having a very nasty negative effect on the electoral fortunes of the Democratic party. Charlie Cook, a well-known and respected election pundit, writes (emphasis added):

…President Obama’s job approval rating in both their August 16-18 and August 17-19 averages was just 51 percent, the lowest level of his presidency. The latter sampling showed his disapproval up to 42 percent, matching his all-time low hit in the August 15-17 tracking poll…

These data confirm anecdotal evidence, and our own view, that the situation this summer has slipped completely out of control for President Obama and Congressional Democrats. Today, The Cook Political Report’s Congressional election model, based on individual races, is pointing toward a net Democratic loss of between six and 12 seats, but our sense, factoring in macro-political dynamics is that this is far too low.

Many veteran Congressional election watchers, including Democratic ones, report an eerie sense of déjà vu, with a consensus forming that the chances of Democratic losses going higher than 20 seats is just as good as the chances of Democratic losses going lower than 20 seats. A new Gallup poll that shows Congress’ job disapproval at 70 percent among independents should provide little solace to Democrats. In the same poll, Congressional approval among independents is at 22 percent, with 31 percent approving overall, and 62 percent disapproving.

That all of this is happening against a backdrop of an economy that appears to be rebounding and a resurgent stock market underscores how much the President’s and his party’s legislative agenda have contributed to these poor poll numbers.

We believe it would be a mistake to underestimate the impact that this mood will have on Members of Congress of both parties when they return to Washington in September, if it persists through the end of the Congressional recess.

If you are losing support even while the economic situation and stock market are improving, you are obviously doing something wrong.

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Barack Obama’s health insurance reform initiative is clearly foundering. So, his administration has pulled out the big guns. Health and Human Services Secretary Sebelius on the Sunday morning talk shows. Obama himself had a prime time press conference on the issue. He has hosted a number of town hall meetings. The President has even written an opinion piece in the New York Times.

Yet, most pundits are still acting as if his healthcare efforts are on life support. I have read any number of posts from pundits of all political stripes asking why Obama is not having success on healthcare.  The answer is simple: Barack Obama needs to learn when to be the conciliator-in-chief and when to be an asshole.

Wasting political capital on banks

Let’s rewind a bit to explain. Back in July, I wrote that Obama had wasted a lot of political capital by caving in to the financial services lobby. In my view, this goes to the core of the issue. The US and global economy were poised on the precipice.  Obama rightly put economic issues first as he entered office in January, dealing with economic stimulus and financial sector reform. However, his crisis solution has been a massive giveaway to big banks, effectively transferring money from taxpayers to the banks in order to shore up their bottom lines and keep them solvent.

Team Obama thinks this was a necessary evil to prevent economic collapse.  But the average guy on the street of any political stripe sees this as galling.  You have a trader at Citigroup, a ward of the state for all intents and purposes, poised to make $100 million. JPMorgan recorded record revenue and $2.7 billion in profit last quarter. And Goldman is poised to pay record bonuses this year.  For Wall Street, the crisis seems to be over and it is business as usual. The response for many is rage, anger, at the way banks have been gifted a new lease on life while ordinary Americans are displaced.  Much of this bile is directed at Wall Street, but the true anger should be reserved for Washington.

Populism is rising

And now we are getting that anger on health care. People are angry that the economy has suffered for so long and they are angry that the economic elite are prospering again but they are not. The realization that this did not have to be is sinking in.

Barack Obama campaigned for President as a change agent.  In effect, he was promising to change Washington, so that ordinary citizens benefitted as much as, if not more than, special interests. However, it seems that Washington has changed him. You have the banks getting bailed out, GM and Chrysler, a stimulus bill which many see as laden with pork-barrel spending, the secret deal with the drug lobby, and on and on.

These are not ordinary times, folks. This is a depression.  People are afraid – afraid of losing their jobs and their homes, afraid their standard of living will fall, afraid they will be the first American generation ever to be permanently, worse off than their parents. Most of all, Americans are afraid of America’s standing in the world. This economic period is shattering a world view that the American dream is attainable for everyone.

Enter the demagogues. In times of acute economic stress, demagogues, political bullies, fear merchants, and war mongers of all stripes come out of the woodwork.  These individuals are willing to point the finger and assign blame. They are willing to tell people what they want to hear. And their message is just fact-based enough to pass muster for anyone looking to channel their anger and disappointment about the sorry state of the economy.

Why do you think the birthers movement, challenging the American bona fides of Obama, is popular despite the evidence? Why do you think the idea of government ‘death panels’ is gaining currency in the healthcare debate?  It’s not because these ideas are accurate and I don’t think it’s because people are dumb. It’s because the people making these claims are pointing fingers and naming names.  They give us a target at which to vent our anger.

This is a major reason why the Austrian economics solution to depression is ill-conceived.

It is the same wrong-headed prescription given to the Asians in 1998 and to Argentina in 2001.  We squandered an opportunity for fiscal prudence when the economy was on more solid footing.  With depression on our doorstep, is now the right time to start cutting back?

This would mean liquidating General Motors, bankrupting Royal Bank of Scotland and Citigroup or allowing Iceland, Hungary and Pakistan to fend for themselves.  In theory, each of these measures seem prudent.  But, in practice, these measures would result in huge job loses, would induce further deleveraging and asset price declines, would deplete capital from an already fragile global baking system, and would lead to a probable depression of unimaginable severity.  It is in such a bleak environment that dangerous despots and dictators like Hitler and Mussolini rose to power, taking advantage of the natural human need for ’strong’ leader in a time of chaos and uncertainty.  Could we expect any different today?

The answer to that question is no. And we should remember this as we debate policy responses. The rise of extreme populist fervour on all sides is troubling and could lead to much worse if the economy does not show a robust recovery.

Obama needs to be an asshole

I have said before that Barack Obama is in a political and economic position more akin to Herbert Hoover than Franklin Roosevelt. Hoover dealt with a sick economy that was still falling.  Roosevelt entered the White House after a large percentage of the economic damage had been done. I believe the economic situation for Obama is certainly less severe than it was for Hoover, but still precarious.  I do not mean to say that Obama is the ‘black Herbert Hoover’ as my friend Yves keeps pointing out. I do mean to say that he needs to be thinking of himself as Hoover and not Roosevelt to have the right mental predisposition of what’s at stake.

So, from a purely Machiavellian perspective, Obama needs to jettison the professorial above-the-fray coolness and get down in the trenches and fight for what he believes in.  And that means he is going to have to run roughshod over his enemies.  Mark Thoma pointed me to a quote that gets the essence of this argument:

A lot of what our job is about is understanding the point of view of others, even when we disagree with them. A lot of our job is explaining to students a wide variety of viewpoints, and allowing them to choose from among them.

I don’t think FDR worried so much about the point of view of others–Doris Kearns Goodwin said he “gloried in his enemies.”

FDR also largely got what he wanted.

So, when pundits debate where Obama is losing hearts and minds, it has as much to do with style as substance.  For instance, Patrick Buchanan says Obama is losing the center because he’s running left. He would say that. Robert Kuttner says Obama is losing the left because he is running center. He would say that too.

But Nate Silver’s critique in his Grand Unified Obama Critique is more on the mark.

If liberals are convinced that the President is too conservative and conservatives are convinced that he’s too liberal then either the President must be doing everything right or everything wrong. Lately, granted, it has seemed more like the latter…

What I think people were hoping for is that Obama would, somehow or another, be able to overcome the institutional barriers to change, probably through a hands-on approach involving a lot of public persuasion.

Put bluntly, Obama needs to be an asshole. Right now it looks like he is willing to compromise on any and every issue. Yes, compromise is an integral part of leadership and governance. But, there is a time for compromise and a time to fight.

For which specific issues is Obama really willing to fight and lose? He is not saying, “Give me Liberty, or give me Death!” Americans still have no clue what his core beliefs are. And, they are losing respect. That gives demagogues an opening and is the main reason Obama’s grass roots support has evaporated when he needs it most.

Look, if the economy regains solid footing by mid-2010, these issues will go away and Obama’s political party will benefit in the mid-term elections. He might even get the Roosevelt treatment for bringing us out of a deep economic contraction. However, if the economy remains fragile, as I believe it will, this lack of fight will become a true liability for the President.

Unquoted related articles

Where’s Mr. Transformer? – Eugene Robinson

Palin’s Red Menace – Richard Cohen

Related posts:

• Barack Obama as Herbert Hoover
• Obama and health care: Wasting political capital
• Is Obama really “Change we can believe in?”
• Obama must disown Wright
• Public anger at Wall Street begins to boil over

Charlie spoke with Obama’s Director of the Office of Management & Budget yesterday.  The video is below and it runs 30 minutes.  Orszag talks about Obama’s health care reform proposal after the first 11 minutes taken up by Obama and his press conference.

Related posts:

• Forstmann on Charlie Rose: easy money caused crisis
• A conversation about the growing fiscal deficit on Charlie Rose
• A conversation with Rahm Emanuel on Charlie Rose
• A conversation with Richard Posner on Charlie Rose
• A conversation about Bear Sterns and the economic crisis

Look, everyone and his brother are jumping on the “Goldman is evil” bandwagon these days.  Even the Rupert Murdoch’s Wall Street Journal is talking about Goldman Sachs like they are “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”  Well, I’m not.  I’ve got news for you: you’re barking up the wrong tree.

It’s the U.S. government we should be pointing fingers at. While Goldman is crying out thank you sir, may I have another as everyone piles on, the U.S. government, which often seems bought and paid for by Wall Street and is the one actually running things here, is getting off scot-free. 

Here’s a question for you, if Goldman made out like bandits from the AIG fiasco, who do you think allowed that?  Government.

When Goldman’s Lloyd Blankfein was the only person in the room from Wall Street as AIG’s fate was debated, who do you think allowed him? Government.

When TARP funds were disbursed to re-capitalize Goldman and other banks, who made that decision?  Government.

When Goldman repaid its TARP funds, paving the way for them to then hand out record bonuses, who do you think allowed this? Government.

When Goldman sold asset-backed securities to investors when it was net short the mortgage-backed market, whose rules do you think allowed this? Government.

Forget about Goldman Sachs.  Start worrying about government.

They are the ones who regulate the financial services industry.  Government is the one which makes laws governing how financial services companies an and cannot operate.  Government is also the one which can change the ground rules going forward to help prevent a recurrence of this sort of financial crisis in future.

As my good friend Marshall Auerback says the advantages firms like Goldman have are “symptomatic of the problem, but they are not the problem.”  The problem is Government and its cozy relationship with the industry it is suppose to regulate and control.  The government is captured by the financial services industry, plain and simple.  This is why the global financial system is a shambles.  The question is: what are you going to do about it?

It seems like the only thing most people are going to do is sit around and whine about Goldman and big banks making a shed load of cash.  Then, they’ll get all riled up and angry at Goldman and the rest of Wall Street and try and tax these people to level the playing field.  Doesn’t sound like a very comprehensive solution to me.

How about this: stop elections in America from being controlled by money.  We can eliminate private funding of the electoral process.  Of course, Barack Obama wouldn’t be so happy about this since he owes his election to private funding.  And, free market zealots will be shouting down this proposal from the word go. But, so what?  Isn’t it obvious that money drives the political process in the United Sates?  Do you have any better ideas?

Here’s another one: let’s get rid of Political Action Committees (PACs) too.  Aren’t these just vehicles through which big money can be channelled into supporting one candidate over another.  You might want to have a look at the Top All-Time Donors list to see what I mean.  By the way, for you Goldman-haters, GS is in 4th place with $30 million donated, right behind our friends at the National Association of Realtors.

And, let’s round out my trifecta of suggestions with a ban on a bunch of lobbying activities.  If it were up to me, I’d ban activities like this and this.  Why should lobbyists, who usually represent corporate interests, get a seat at the table when you and I don’t?  Sure there are consumer lobbyist groups like the AARP too, but I would restrict their contacts to government as well.  And employees of big business should be barred from moving directly from an interested company/law firm to a regulatory.government role and vice versa.  They are like lobbyists who are actually inside government: interested parties who will not be able to take arms length decisions.

So, yes, Goldman is living high on the hog. But the last time I checked, it was Congress and the President who are actually supposed to be looking out for our interests in this representative democracy.  Right now, our legislative and executive branches are filled with people who are incentivized to look after the interests of big business and NOT after the interests of individual Americans.

If you want change we can believe in, start focusing in on the right people: Congress and the President.

Related posts:

• Let Goldman fail next time
• Jamie Dimon: ‘we don’t need’ your money
• Barney Frank rips Hank Paulson’s bait and switch
• Public anger at Wall Street begins to boil over
• Why you won’t hear me using the word bankster

I listened to the first day of the Sonia Sotomayor confirmation hearings for a spot as a US Supreme Court justice. I was very impressed.  The three who impressed me the most were Al Franken (D-MN), Arlen Specter (D-PA), and Sotomayor herself.

Franken was very well-spoken, even inspirational in his commentary after his introductory remarks.  Specter showed himself to be the hard-nosed pit bull of a legislator that we have come to love/hate.  The man is clearly knowledgeable about the issues and jurisprudence in a way that would leave you satisfied with the abilities of our legislators.

Sotomayor, as she described herself, is the epitome of what we should be looking for: someone who decides cases based on the law and nothing more.  If the GOP wants to get Sotomayor on so-called judicial activism, they have a very difficult struggle in front of them.

Below is some Bloomberg Television commentary about the hearings.  If and when I get other footage, I will post it.

Update 1935ET: Here is the transcript of her opening statement via Swampland’s Jay Newton-Small.

Related posts:

• Arlen Specter to switch parties
• Bloomberg is coming down hard on Goldman
• German chancellor chastises US for easy money
• Short-selling financial shares is now illegal
• Barney Frank rips Hank Paulson’s bait and switch

Marshall Auerback sent me this joke about Mark Sanford.

Mark Sanford’s staff thought he was hiking in the mountains. In fairness to his aides, "I’m getting some Argentinian tail." sounds a lot like "I’m hiking the Appalachian Trail."

Related posts:

• Case-Shiller Index: Less bad, but three markets cut in half
• Case-Shiller: Price increases in 14 of 20 markets
• Americans are not increasing savings
• Congress does need to act on the Economic Patriot Act
• Obama leads McCain by 2 points

Just when you thought things couldn’t get any more questionable in Washington, then along comes this (hat tip Tom).

Washington Post publisher Katharine Weymouth said today she was canceling plans for an exclusive "salon" at her home where for as much as $250,000, the Post offered lobbyists and association executives off-the-record access to "those powerful few" — Obama administration officials, members of Congress, and even the paper’s own reporters and editors.

This is not a joke, it was a serious plan whereby the Washington Post was set and ready to use its publisher’s home to bring together lobbyists on the one side and White House and congressional people on the other.  Boy, I wish I had that kind of access.  But, then again, I would have to pay a lot of money.  On second thought, maybe it’s not a good deal.  But, hey, if you are a health care lobbyist (the type of lobbyist this event was designed for), then you’ve got the dosh.  Why not?  Apparently, not every lobbyist felt that way.

The astonishing offer was detailed in a flier circulated Wednesday to a health care lobbyist, who provided it to a reporter because the lobbyist said he felt it was a conflict for the paper to charge for access to, as the flier says, its “health care reporting and editorial staff."

To sum up, the Washington Post, which last nearly $20 million in the first quarter, has made bringing people together another proposed revenue source.  In this case, it was to bring together lobbyists and government and was to be paid by the lobbyists for doing so.  When some invited lobbyists felt this was a conflict of interest, Politico was able to get its hands on an invite.  As a result, the Post cancelled the event.

Oh, and by the way, if you think that U.S. health care reform proposals are not heavily influenced by lobbyists, you might want to read the full account below.

Source

Washington Post cancels lobbyist event amid uproar – Politico

Update 940AM: Below are some additional sources with reports of damage control by the Washington Post.

Washington Post Flap: How They Played It – Karen Tumulty, Swampland
Pay-for-Chat Plan Falls Flat at Washington Post – NY Times
Post Co. Cancels Corporate Dinners – Washington Post

Related posts:

• Doubling down at AIG
• Congress passes the bailout bill
• Obama leads McCain by 2 points
• Congress does need to act on the Economic Patriot Act
• Question of the day: Would we go to war for Georgia?

In case you missed it, Federal Reserve Chairman Ben Bernanke was on Capitol Hill this morning making his case in regards to the Bank of America – Merrill Lynch deal.  The Chairman stated in unequivocal terms that he did not pressure anyone.  Rather, he stated that he cautioned Ken Lewis about the prudence of invoking a MAC clause and doubted whether Lewis could be successful in extracting himself from the deal (I agree that the MAC clause was not going to help BofA).

Whether Bernanke is justified in his defense is irrelevant at this juncture.  What is relevant, however, is that the Bank of America – Merrill Lynch deal has become a central episode for political recriminations and posturing.  As I said two weeks ago:

My take here is that the Bank of America case has become very political – and that means the blame game is going to be played. Someone — Bernanke, Lewis, Thain or Paulson — is going to take the fall.  The knives are out.

Indeed, the knives are out and it is looking increasingly likely that Bernanke will be the scapegoat.  Below is a Bloomberg News video with Rep. Edolphus Towns (D-NY), Chairman of the House Oversight Committee.  If you listen to what Towns is saying, it does not look very good for Ben Bernanke. 

Next on the hot seat: Hank Paulson.

Related posts:

• Ken Lewis points the finger at Bernanke and Paulson
• Is Bernanke Toast? If he is, Summers is a shoo-in
• BofA CEO confirms government coerced him into Merrill deal
• Was there a cover-up at the Federal Reserve?
• Merrill – Bank of America deal

Here’s a conspiracy theory for you.  As I am not much of a conspiracy theorist, I ill keep this one pretty simple. Here’s the chain of events.

Back in late September when the world was falling apart, Ben Bernanke, Tim Geithner and Hank Paulson were all desperate to keep things from unravelling.  As a result, they were pleased that Ken Lewis and Bank of America were willing to pony up  massive $44 billion to take over Merrill Lynch. They might even have encouraged the deal (i.e. we will smooth the way.  There will be no FTC hurdles. We will soft peddle investigation into Countrywide mortgage fraud, etc)

The problem, of course, was that Merrill Lynch was a bottomless pit of asset writedowns.  Lewis, the deal maven, must have been crestfallen when he learned how poorly things were shaping up in Q4 2008- sour enough to cancel the deal outright. Enter Bernanke and Paulson.  Depending on who you believe, Lewis was going to cancel this deal, only to be coerced by Paulson and/or Bernanke into allowing it to proceed.  Let’s forget that this suggests Lewis was not minding his fiduciary responsibility. If true, we should all be very troubled that government officials were abusing their power in order to manipulate actions in the private sector.  By the way, Tim Geithner was already transitioning to his new role as Treasury Secretary, so he gets a bit of free pass on this one.

Now comes the allegation from a Republican congressman that Ben Bernanke, the soft spoken Southerner, was not only coercing, but he was covering it up too.  This does not look so good.  Of course, Gentle Ben acquitted himself of these charges today before Congress. But, with his term as Federal Reserve Chairman up in January, his re-appointment is increasingly being called into question.  And Larry Summers is the front runner for his seat (see Mark Thoma’s article).

The Republicans smell blood.  But — here’s where my conspiracy theory comes in – so does Larry Summers.  Remember the White Paper that Obama just released? Doesn’t it give sweeping powers to the Federal Reserve? Didn’t Summers have a strong hand in crafting this white paper? And doesn’t Larry Summers know his name has been bandied about as a replacement for Bernanke?  You see where this is going, right?

Update: Below is a video of Chairan Bernanke’s testimony.  There are 3 full minutes of audio problems to begin his testimony – a sort of metaphor for how things are going for Bernanke of late.

Related posts:

• Throwing Bernanke under the bus
• Ken Lewis points the finger at Bernanke and Paulson
• Obama to re-appoint Bernanke
• Was there a cover-up at the Federal Reserve?
• Bernanke expects recovery later this year