Obama's Rugged Week

In his weekend video/radio address, President Barack Obama sounded happy to have been in California rather than Washington for part of last week. His job approval rating in the Gallup Poll went up.

President Barack Obama faces a rugged week with multiple challenges on the economy and in geopolitics. He has a prime time press conference on Tuesday to press his case.

** His embattled treasury secretary, Tim Geithner, under fire for helping enable massive bonuses to executives of the bailed-out insurance giant American International Group (AIG), is rolling out his plan to deal with the banks' toxic assets. The credit gears are still largely stuck, along with the economy.

Geithner's plan is to combine $75 billion to $100 billion in public bailout money, leveraged with the Federal Deposit Insurance Corp. and Federal Reserve, with private funds to buy $500 billion in toxic assets.

Embattled Treasury Secretary Tim Geithner is rolling out a public/private partnership to deal with the banks' toxic assets.

Is this another bailout to Wall Street? Or is it needed pragmatism to work with a deeply troubled, farcically entitled though still necessary private financial sector?

** Obama's budget proposal is running into fierce resistance from Republicans, who insist that the budget will be busted in the wake of a Congressional Budget Office estimate that deficits would be higher than the White House thinks. Some moderate Democrats in the Senate are also antsy about the scale of new spending Obama proposes to both jump-start the US economy and transform it for the long run.

So Obama and Vice President Joe Biden are both headed up to Capitol Hill for separate meetings with senators on the budget.

On the other side, some commentators like Paul Krugman complain that Obama isn't doing enough. What's a whipsawed president to do?

** Obama's also developing new regulations on the behavior of financial institutions, including executive compensation. The plan for the AIG bonuses is to deduct them from bailout funds. But that's closing the barn door after the horses are out.

It seems clear that Wall Street executives still want to make tons of money. But how much do they have to make for the country to avoid a capitalist strike? And how realistic is that?

As Obama put it last night on 60 Minutes: "One of the things that I have to do is to communicate to Wall Street that, given the current crisis that we're in, they can't expect help from taxpayers but they enjoy all the benefits that they enjoyed before the crisis happened. You get a sense that, in some institutions that has not sunk in. That you can't go back to the old way of doing business, certainly not on the taxpayers' dime. ... I mean there were a whole bunch of folks who, on paper, if you looked at quarterly reports, were wildly successful, selling derivatives that turned out to be completely worthless."

** Obama's new Afghanistan strategy review, expected to be completed last week, now apparently won't be released until next week, when an international conference on the troubled nation convenes in the Netherlands at The Hague.

Obama has big decisions to make about Afghanistan's current government, which most regard as corrupt and dysfunctional, as well as the best military and civil strategies to achieve what appear to be America's more limited goals there. While desiring to stabilize the country, the administration appears to be reverting to the original US goal in Afghanistan: Denying it as a base of operations for transnational Islamic jihadist terrorist organizations.

According to the Guardian, one way to deal with the problems associated with President Hamid Karzai, the Bush/Cheney pick for the job, is to create a new post of prime minister. Special envoy for South Asia Richard Holbrooke just denied this. But it's clearly been under discussion.

President Barack Obama's video address for Iranians on the occasion of the Nowruz holiday met a relative cold shoulder from Iranian Supreme Leader Ayatollah Ali Khamenei.

** Iran will participate at the Hague conference next week. Obama's video message to Iranians at the end of last week appeared to be rebuffed, though not extravagantly as these things go. Iran's supreme leader, Ayatollah Ali Khamenei, said that Obama hasn't brought real change to America. Khamenei, falsely reported two years ago in the far right media to have died, is the real power in Iran, not the pop-off President Mahmoud Ahmadinejad. How to play Iran -- freshly empowered in the region with the fall of Saddam's regime and intent on a nuclear energy program that could be used for weapons -- is a key part of any new Afghan strategy and the Iraq endgame.

New CIA Director Leon Panetta was in Pakistan over the weekend discussing the deteriorating situation there and the fight against Al Qaeda and Taliban cadre using the unstable nation as their safe haven.

** As he completes the Afghanistan review, Obama is grappling with the situation in neighboring Pakistan, which is quite unstable. A major front burner issue? Increased aerial drone attacks on Al Qaeda and Taliban cadre using the country as a safe haven. They appear to be increasingly successful militarily, but are highly controversial inside Pakistan, in part because of civilian "collateral" deaths and injuries.

New CIA Director Leon Panetta was in Pakistan over the weekend meeting with the country's current leadership. The country, already beset by a jihadist insurgency playing havoc with US supply lines into Afghanistan, narrowly averted chaos last week when the government gave in to the demands of reformers staging a giant march on the capital by reinstating the nation's chief justice.

Former Secretary of State and Reagan White House chief of staff James Baker was the latest unofficial emissary to turn up in Moscow. Baker said that both America and Russia are responsible for recent poor relations.

** America's relations with a resurgent Russia also require some decisions. Obama has had several unofficial high-level emissaries visit Moscow in recent weeks, including former Secretaries of State Henry Kissinger and James Baker and former Senator and presidential candidate Gary Hart with former Senator Chuck Hagel. Russia is already being helpful to the US by providing new supply lines to Afghanistan, and can do more. But will Obama pay the cost?

A bipartisan commission headed by Hart and Hagel called last week for a very different approach to Russia than those of the Bush/Cheney Administration and the Clinton Administration before it, one which could lead to Russian cooperation in South Asia and the Middle East and on nuclear weapons and to the US acknowledging Russian interests in its "near abroad" and working with Russia on any anti-missile shield in Eastern Europe.

The big meeting on Afghanistan is next week, with the G-20 (group of 20 advanced economies) summit after that in London. Obama will meet there with President Dmitri Medvedev. The plan should be locked down.

In normal times, any one of these things would be more than enough to demand constant attention. These aren't normal times.

You can check things during the day on my site, New West Notes ... www.newwestnotes.com.

Comments

[Pulemerci]

The market reacted quite favorably to the Obama/Geithner plan. Hopefully it will stay on the upswing. I think the President is treating this crisis like a major fire. Throw as much water on it until it's out; then deal with the water damage. Maybe we should give this pan a chance, say more than a day, Mr. Krugman, before we trash it.

[William Bradley - Huffpost Blogger]

Geithner finally had some details on the bank plan. That was lacking when he first talked about it last month.

[LizM]

You know, that lack of detail thing was all President Obama's fault. Seriously! He was the one who, the day before the announcement, said that Secretary Geithner would be announcing all the details the next day. In fact, the secretary was intending to announce only the broad outlines of the plan.

I chalk it up to just a little bit of presidential inexperience but Geithner had to take it all on the chin.

For anyone who is following what Geithner is doing, it is clear that he is acting in a deliberate and prudent manner.

The President owes the Secretary of the Treasury a big, thick, juicy steak dinner, with all the trimmings. :)

[MacQ]

Let's see LAST week he insulted the British Prime Minister.
Got a public face slapping by Russia
Shafted Poland over trying to appease Russia

THIS week he
Shafted Mexico over 97 of their trucks
Got a public face slapping by the mullahs after a videotape trying to appease the mullahs

Shot off his mouth in outrage over bonuses that he approved but didn't know he approved, causing a firestorm of public outrage and death threats to American workers.

Canadian press writes:
"As an aghast world — from China to Chicago and Chihuahua — watches, the circus-like U.S. political system seems to be declining into near chaos. Through it all, stock and financial markets are paralyzed. The more the policy regime does, the worse the outlook gets. The multi-ringed spectacle raises a disturbing question in many minds: Is this the end of America?”

Yes, I'd say many more weeks like this and we'll be asking him to step down.

[LizM]

That Canadian press report was just a little wishful thinking and another example of a holier than thou typical Canadian response. I can say that because I am one and I am quite familiar with the Canadian press, including the Canadian Press.

[BottomLine2008]

Dude, speaking of spouting off your mouth ... lol

Half what you say doesn't hang together.

The "Canadian Press" you cite is a far right financial rag.

[William Bradley - Huffpost Blogger]

Let's see ... No, Obama didn't insult Gordon Brown. No, Obama didn't get a
"face slapping" (no projecting now) from Russia. He's got Russia providing supply lines to US forces in Afghanistan. No, etc. ...

The "Canadian Press" you refer to is a far right newspaper called the National Post.

And so on.

[research]

This TARP bailout is the greatest Fraud in human history.

If you don't understand Swaps,

You don't know what's going on.

http://www.huffingtonpost.com/users/profile/research?action=profile

[William Bradley - Huffpost Blogger]

Enlighten us, with regard to the question at hand ...

>This TARP bailout is the greatest Fraud in human history.

If you don't understand Swaps,

You don't know what's going on.

[research]

Go to the link.

AIG Swaps insure the riskiest hedge fund bet against Main Street.

But AIG keeps no money on hand to pay the claims.

600T$ debt overhang from Swaps. ten times the world GDP.

Swaps ARE THE PROBLEM.

90% of the market is now Swaps not Stock!

TARP money pay off AIG insurance Claims to Hedge funds Shorting Main Street companies.

Tarp funnel trillions into the hand of the wealthiest .1%

[Jad579]

Regarding the PUBLIC-PRIVATE INVESTMENT PROGRAM released today March 23, 2009.

Mr. President:

This does nothing to address the fundamental problem which has caused this crisis. That problem being that the “Best and Brightest” of banking bet that housing prices would do nothing but appreciate and at rates which bugger the imagination. So much for the “Best and Brightest”. All this does is repeat the process which was done by Investment firms in repackaging assets which never had value in the first place and re-sell them at a made up price which will then be divided between the very institutions who have already padded their pockets with tax payer money with yet more tax payer money as incentive to make even more money. I guess the “Best and Brightest” have now found a new home as your advisers. Ponder this: “ The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little.” -Franklin D. Roosevelt

Sadly,
Jad579

[William Bradley - Huffpost Blogger]

Do you mean "beggar the imagination" rather than "bugger the imagination? ... :)

[LizM]

Ha! That was funny. Although, 'bugger' may be the appropriate term.

[MacQ]

Actually, bugger is more apt for what's happening....

[Paul]

"Is this another bailout to Wall Street? Or is it needed pragmatism to work with a deeply troubled, farcically entitled though still necessary private financial sector?"

I hope it is letting them take the bait.

One day soon those AIG guys will wake up to find out that the the board of directors has been dismissed and the management replaced with a bunch of risk-averse career Treasury Dept functionaries whose top priority is to make the company small enough to fail.

The taxpayers own these companies and they should be run for the benefit of the average American.

[BottomLine2008]

That Jim Baker feller is a real horse trader. Not a bad character to have talking in Moscow.

[LizM]

If the Huffington Post ever lowers its word limit again, I'm going to put the blame entirely on you and your bottom lines! :-)

[William Bradley - Huffpost Blogger]

Which word limit are you referring to?

[BottomLine2008]

Hope Panetta got the real lay of the land in Pakistan last weekend. I don't know if these drone attacks are making us safer or less safe.

[William Bradley - Huffpost Blogger]

Probably safer, so long as Pakistan doesn't actually fall ...

[Paul]

I disagree.

Every civilian casualty from a drone missle gives the radicals in Pakistan more ammunition to take down the current government.

How long would a US President last who allowed similar attacks from, say, Venezuela?

Drone attacks are feeding a movement against us. The military benefits of killing a replaceable "militant leader" are negligable.

[CaptainStormfield]

Hey :)
http://www.counterpunch.org/cloughley03232009.html
Brian Cloughey on Afganistan.
He has some interesting comments from his experience in Vietnam.

[BottomLine2008]

I'm not surprised that the Ayatollah didn't do carthwheels over Obama's little video message. Iran wants stuff. Nice words from Barack Obama ain't stuff.

[William Bradley - Huffpost Blogger]

It may not be stuff, but it's a start. Obama's also talking to the Iranian people, and positioning the new US foreign policy image.

[MacQ]

They're have a good laugh with the russians as we speak.

[BottomLine2008]

I'd feel better about Geithner if he wasn't such a New York insider.

[LizM]

Sometimes, a New York insider is just exactly what the doctor ordered...you know what I mean! I think Geithner is really getting a bad rap - give him a little bit of time, at least.

[William Bradley - Huffpost Blogger]

I think there is a hint of the all-pervasive media hysteria about the Geithner stuff. I don't know that he really knows what he's doing, and doubt that any number of people do.

[MacQ]

You'd rather someone from some island who has no idea what's going on?
That job is already filled.

[LizM]

If you want to feel better about Geithner, all you have to do is check out his latest appearance before Congress on Tuesday - the web number is www.c-span.org

Secretary Geithner is so heads and shoulders above most of those Congress critters when it comes to understanding the mess we are in and how to get out of it that it's not even funny. All I can say is, thank God for Timothy Geithner and his staff and everyone at the Fed, too!

[BottomLine2008]

Obama did look a lot happier in California. That's a good weekend speech. So his polling numbers went up. That's good.

[MacQ]

He should stay in California and get into the entertainment business. It's what he does best.
I would be glad to accept his resignation, and even pay him a bonus to leave early..

[BottomLine2008]

Obama's being attacked by every loud mouth around on every issue these days.

[LizM]

Yeah. And all of this fuss about the AIG bonuses is just a lot of hot air...if the administration didn't have the people or the press to deal with, everything would be just fine.

[William Bradley - Huffpost Blogger]

That was supposed to be a joke, right? :)