New York Times Provides The Ultimate Inside-The-Bubble Guide To Economic Crisis
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In a magazine piece previewed in today's New York Times, Peter Baker drops thousands and thousands of words concerning the White House's effort to do something about the terrible economy and its attendant massive unemployment crisis. The "path from crisis to anemic recovery," Baker says, "was marked by turmoil." I'll say it was! U6 unemployment is steadily holding in the 16- to 17-percent range! That causes "turmoil" in that "millions of Americans" cannot purchase "food" to "eat" or "pay rent" and stuff. But it's best to not focus on all of that, because clearly, the biggest victim of the economic crisis is actually the Obama administration.
See, the president recently had a super-important meeting with advisers, in preparation for the State of the Union address. And in that meeting the president lamented that his team was presenting him with "ideas" on the economy that were "uninspiring." As some unnamed source told Baker, the president begged, "You know, guys... I've told you before, I want you to come to me with ideas that excite me."
And Obama has been on the hunt for some exciting job-creation ideas! (Here are some, from Dan Froomkin, that he can have for free.) Why, he's talked to liberal economists and conservative economists. He's chatted up labor leaders. He's broken bread with CEOs. It may interest you to know that many of those CEOs were made to cancel their buffet lunch and be served "chicken, fish and pasta" in their meeting, as if they were commoners. This is definitely a portrait of shared hardship.
But the singular hardship this exegesis documents is an electoral one:
Obama's frustration could set the tone for the remainder of his term. For all the trials of war and terrorism, the economy has come to define his presidency. During the first half of his term, he used the tools of government to shape the nation's economy more aggressively than any president in 75 years. As the national debt rises and Republicans assume more power on Capitol Hill, it won't be easy finding ways to juice the economy that are exciting, effective and politically viable. Every day, in briefings, in trips around the country, in letters from the public, Obama is reminded of the many people who are still hurting. And he surely knows that if he cannot figure out in the next two years how to create jobs, he may lose his own.
But if Obama needs someone to talk to who might have an exciting idea, so does Baker. The piece sprawls on and on, but it never even attempts to move beyond insider sources who evince no knowledge whatsoever as to how actual Americans are living in the economy.
Online, the piece comes packaged with a ruin-porn slideshow of actual people from Rockford, Ill., in a cheap nod to the fact that a world exists outside of the Beltway. But Baker's digest is exclusive in its insularity: you get rolodex dial-ups from Alan Binder and Douglas Holtz-Eakin, by-the-numbers defenses of the administration from Christina Romer and Tim Geithner, and a re-accounting of the job-switch shuffle through the revolving door. We visit Geithner in his "high-ceilinged office" at Treasury and catch up with a freshly-tanned Larry Summers at a "restaurant in suburban Boston." On the search for answers, Baker wanders as far as the U.S. Chamber of Commerce building, where he stops to ponder the "J-O-B-S" banner hanging from its edifice. There, special meanings are divined.
It's no wonder that the piece actually has nothing of substance to say about anything other than all of the interpersonal relationships that are consuming the attention of precisely no people facing losing their homes or unemployment. "Over the last two months, I interviewed nearly all of the team's main figures, past and present," says Baker. And what did he learn? Per Baker, "When we talked about their relations with one another, it was like picking through the wreckage of a messy divorce." So it's like Blue Valentine starring people not as pretty as Ryan Gosling and Michelle Williams.
This overt fascination with "relationships" is why the piece is lacking in many other areas. As Marcy Wheeler points out today:
But nowhere in this epic does Peter Baker once use the word "foreclosure." Or "housing." Or, god forbid, "HAMP."Now, there's no way to tell whether Baker neglected any discussion of the entire cause of the economic crisis and one of the elements that continues to rot out the core of the economy because he simply didn't ask about it -- in two months of interviews. Or because his sources didn't or wouldn't talk about it.
[I'm guessing it's a little from column A, a little from column B.]
But somehow the paper of record wrote what was supposed to be a definitive article on how the Obama Administration plans to fix the economy without once mentioning that part of the economy, housing, that has traditionally led recoveries but that, partly because of the obstinance of Obama's economic team, continues to drag down the recovery.
"There is a compelling case," Baker relates, "that Obamanomics has produced results." What's that case? Well, basically, it's the same blankheaded defense of TARP that's so standard that it probably now comes preloaded onto reporters' laptops as a macro:
An economy that was shrinking in size and bleeding more than 700,000 jobs a month is now growing at 2.6 percent and added 1.1 million jobs last year. The American Recovery and Reinvestment Act, known as the stimulus, produced or saved at least 1.9 million jobs and as many as 4.7 million last year, according to the Congressional Budget Office. The much-derided Troubled Asset Relief Program, or TARP, started by George W. Bush and continued by Obama, stabilized the financial sector, and the big banks have repaid the money with interest. According to a Treasury Department report sent to Congress this month, TARP will cost taxpayers $28 billion instead of the $700 billion originally set aside. The nearly $80 billion bailout of the auto industry may cost taxpayers only $15 billion, as the restructured General Motors and Chrysler come back to life with strong sales. The stock market has surged; corporate profits are setting records.
Baker says that this argument is puzzlingly "offset" by "simple figures," like the unemployment rate and the federal budget deficit. But, you know, there are some other simple figures! Like the billions of dollars outside of TARP that was given to major Wall Street banks by the Fed, which do not figure into the fractional fund-accounting documented above. There's also the portion of that money that was used to beef up Wall Street's lobbying army, which labored night and day to ensure that financial regulatory reform would not lead to circumstances that would alter the business practices that led to the collapse in the first place or forestall future TARP-like action after those same business practices lead to future collapses.
There are also other, more complicated figures to consider -- like, say, the true value of toxic assets, which have been left off the balance sheets of major financial institutions because to acknowledge them would be to come face-to-face with the reality of insolvency. Baker seems to believe that a grand debate took place over nationalizing these zombie banks. That debate, per Baker, turned out like so:
Summers entertained the idea, at least for purposes of discussion, for banks that could not pass a "stress test" examining their solvency. Geithner and Ben Bernanke, the Federal Reserve chairman, argued against it. Ultimately the tests found the banks were in better shape than feared, a critical moment in shoring up confidence. "The cheapest form of stimulus is confidence," Summers likes to say.
This is the part that makes me hope that someone was thoughtful enough to give this article to Hu Jintao, because he'd be well-positioned to appreciate how far America has come in developing an "official history." Whatever "confidence" has been manufactured through this arrangement is strictly of the Potemkin variety. In actuality, those stress tests were designed to be nigh impossible to fail. Having freed those banks from the threat of nationalization (a move designed, unsuccessfully, to forestall any White House critics from leveling the charge of "socialism"), they have been granted the opportunity to amass capital, from taxpayer donations and from the continuance of previous practices, in order to hoard it against any eventual mark-to-market day of reckoning.
And that's as far as anyone's "confidence" extends. It certainly hasn't jumpstarted job growth. Why would it? And yet, Baker reports that this has the White House completely baffled:
Still nervous after the crash, and uncertain about government policies, American corporations are sitting on $2 trillion in cash, and the president wants them to use it to hire people. "How do I get companies sitting around the table to start investing in job-creating enterprises?" Obama asked executives at last month's lunch, according to a person in the room.
Yes, it almost seems like the lack of jobs is related somehow to the sitting-on-trillions-of-dollars -- as if people have an intimate awareness that the rot at the center of the economy has been papered over by policies that entirely favor Wall Street wealth generators and a gentleman's agreement to pretend that everything is fine.
At any rate, there's really not much here for ordinary Americans to learn about the state of the nation, other than the fact that some wealthy people may lose an election at some point. Beyond that grim possibility, the singular takeaway is that inside the bubble, everyone is doing pretty well in this economy. We'd send you a postcard, but who knows if you'll be in your home a week from now?
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First Posted: 01/19/11 04:25 PM ET Updated: 05/25/11 07:25 PM ET