At the broadest level, Thursday's announcement from the White House was encouraging -- for the first time, the president endorsed potential new constraints on the scale and scope of our largest banks, and said he was ready for "a fight." After a long, tough argument, Paul Volcker appeared to have finally persuaded President Obama that the unconditional bailouts of 2008-2009 planted the seeds for another major economic crisis.
But how deep does this conversion go? On the "deep" side is the signal implicit in the fact that Volcker stood behind the president while Tim Geithner was further from the podium than any Treasury Secretary in living memory. Where you stand at major White House announcements is never an accident.
Increasingly, however, there are very real indications that the conversion is either superficial (on the economic side of the White House) or entirely a marketing ploy (on the political side). Here are the five top reasons to worry.
- Secretary Geithner's spin on the Volcker Rule, Thursday night on the Lehrer NewsHour, is in direct contradiction to what the president said. At first, it seemed that Geithner was just off-message. Now it is more likely that he is (still) the message.
- The White House background briefing on Thursday morning gave listeners the strong impression that these new proposals would freeze the size of our largest banks "as is." Again, this is strongly at odds with what the president said and seemed -- at the time -- to indicate insufficient preparation and message drift. But who is really drifting now, the aides or the president?
- At the heart of the substance of the "Volcker Rule," if the idea is literally to freeze the banks at or close to their current size, this makes no sense at all. Why would anyone regard twenty years of reckless expansion, a massive global crisis, and the most generous bailout in recorded history as the recipe for creating "right" sized banks? There is absolutely no evidence, for example, that the increase in bank scale since the mid-1990s has brought anything other than huge social costs -- in terms of direct financial rescues, the fiscal stimulus needed to prevent another Great Depression, and millions of lost jobs. On reflection, perhaps the president really still doesn't get this.
- Since Thursday, the White House has gone all out for the reconfirmation of Ben Bernanke, whereas gently backing away from him -- or at least not being so enthusiastic - would have sent a clearer signal that the president is truly prepared to be tough on big banks and their supporters. Unless Bernanke unexpectedly changes his stripes, his reappointment at this time gives up a major hostage to fortune -- and to those Democrats and Republicans opposing serious financial reform.
- As the White House begins to campaign for the November midterms, how will they answer the question: What exactly did they "change" relative to what any other potential administration would have done in the face of a financial crisis? How will they counter anyone who claims, citing Rahm Emanuel, that: "The crisis is over, and we wasted it." No answer is yet in sight.
The Geithner strategy of being overly nice to the mega-banks was not good economics and has proven impossible to sell politically -- the popular hostility to his approach is just common sense prevailing over technical mumbo jumbo.
But selling incoherent mush with a mixed message and cross-eyed messengers could be even worse.
Cross-posted with The Baseline Scenario.
From day one, many of us saw the writing on the wall by bringing the Goldman Gang to the White House. At this stage of the game President Obama's credibility is in question which goes straight to the core. It is no longer a question of tactics or strategy, we are now questioning his core.
Unless the country sees a real move away from the Wall Street crowd, things will continue to deteriorate. Congress can confirm Bernanke, just for the sake of continuity (appearances) but, Obama still has a chance to prove his mettle by getting rid of Geithner and Summers. Just like the positioning of Volcker to his right sent a message, how about we bring him out of the background and into the forefront. Bernanke can be held in check with the right team.
We need to take back the money power from private bankers. Eliminate compound interest as much as possible. It grows exponentially, economies do not so it is a mathematical certainty that the jig will be up at some point. That point is likely near. No other solution will work aside from a massive debt destruction like the great depression or destruction of the dollar or both.
Quote: “The refusal of King George to allow the colonies to operate an honest money system, which freed the ordinary man from clutches of the money manipulators was probably the prime cause of the revolution” -Benjamin Franklin, Founding Father
It is the blatant cynicism, ... the disparity between words and deeds which caused the defeat of Coakley in MA last week. Not so much disparity in Coakley's campaign, ... there was none. She was so out of touch with the voters in the Bay State it is a miracle she was not trounced in an even greater margin.
No, ... it is the disparity in Obama's administration, and its lack of deeds which angers Americans most.
If the "Volcker Policy" is nothing but words, while Tim, Larry and Ben continue to cater to the every whim of Wall Street, the Fall Elections will truly be a political apocalypse for the Democratic Party.
I will continue to work on behalf of my select Senate candidate, Joe Sestak, ... simply because at this moment he has not acquiesced to this fraudulent misrepresentation of reality as practiced out of the White House and by the Democrats at large.
If you believe we forgot the election in MA already, or the blatant betrayal of our support for the president as he did nothing for our concerns on the economy, ... you Democratic leaders ignore the truth at your own peril.
Just like the Sec of State and the Defense Sec comments after the West Point Speech.
Don't pay any attention to what ANY WH adminstration says. No matter who's in office.
Watch what they do.
People will show you who they are.
Obama brought advisers with him who know what happened last time. And promptly ditched them for these "experianced pros" Summers and Geitner and Bernake. Yeah they are experianced...at causing catastrophe.
Until Roosevelt started helping the people the banks had harmed, nothing got better. Things have not changed in eighty years, just the names of the people involved. We now are left to figure out who is in whose role.
The challenge is to bring in people into the political system who have scruples and principles, and aren't corrupted by Wall Street. Switching back and forth and forth and back between democrats and republicans simply reinforces the old saying that was so aptly sung by The Who in "Won't Get Fooled Again."
Meet the new boss. Same as the old boss.
The simpler the strategy, the greater chance for success. The complexity comes in the details, and thus, the amount and severity of 'collateral damage' grows exponentially.
The only sure way to derail a runaway train is to move the track, just one length on one side. The Ridicupublicans are a classic example of this strategy. They see the world through rose-colored blinders with both hands grabbing their buttocks. Just kill the government, a simple strategy.
Ethics and compassion are subtleties of enormous complexity, which is why truly intelligent people grasp them, and refer to their exercise as 'practice.'
This 'system' never was anything but propaganda. Smoke and mirrors. If you read the constitution carefully, and ask yourself HOW the citizenry actually has methodology to manage not only itself but its 'public servants,' you will quickly see that the document is a chimera dressed as a fuzzy lamb.
I wish that Candidate Obama who was running in 2008 was around. I liked him.
QUESTION: How many Americans believe that the U.S. Senate will pass worthwhile regulations of the Bank/Investment Corporations while the U.S. Senate is still owned and operated by these very corporations they SAY???!!! they want to regulate???!!!
This is a question a 7 year old can answer, hopefully the American people can figure it out and the truth is the last thing those swindling global corporations want is a Consumer Protection Agency that will be holding these corrupt corporations accountable and would be prosecuting any and all criminal activities since the SEC, the Department of Obstruction of Justice and other regulatory agencies have become totally useless because they have been corrupted by the Robber Barons.
It is almost impossible today to find anyone in the Federal Government who is on the side of the American people which is another good reason why the people of this country no longer have a republic. PURR (PATRIOTS UNITED FOR THE RETURN OF THE REPUBLIC)
He is the guy who wants to control the "free" market, not let it work on its own.
Any man who encourages manipulation and obfuscation over truth and transparency is not on our side, people.
Get them all out. Every face we see in Washington, familiar or not familiar, is there for a reason and that reason is that they have been placed there.
Don't fall for the new faces. They hide the old faces.
It's time to fight back.