Quick Morning After Thoughts On Obama's Speech
2 - During the always amusing cutaway shots I couldn't help noticing the wistful looks on many of the presidential wannabes in the audience, all of whose faces had the same sentiment grudgingly etched in italics: "I really wanted this, but this guy's got the goods in ways I never will." On my list that captured John Kerry, Evan Bayh, John McCain and Jay Rockefeller. Maybe I missed some.
3 - Can't wait to see what Obama said was the $2 trillion in budget savings over ten years they've already identified when the budget outline gets unveiled Thursday. Team Obama is laying the groundwork for the kind of budget honesty we haven't seen since -- well, since Clinton, in whose OMB I proudly served. If the $2 trillion over ten is real stuff (and not magic asterisky) it will be fabulous. Fingers crossed.
4 - Wonder if anyone else was as struck as I was by Obama's message to kids about not dropping out of high school. If you drop out, he said, "you're not just quitting on yourself -- you're quitting on your country." Why hasn't a president put it that way before? Another great example of Obama's instinct for using the bully pulpit to make a difference. Look for that quote to be up on placards in high poverty schools across America soon. Hope they develop a more detailed "hang in there" You Tube message from Obama that schools and other caring adults can show to every kid who's at risk of dropping out.
A Case for Hope
But I'll tell you what gave me supreme hope Monday: watching Obama conduct what amounted to a national teach-in at the end of his Fiscal Responsibility Summit at the White House. Find the clips on You Tube and watch them. (Start here, here, here, and here.) Obama led a conversation about our fiscal and economic challenges with a hundred or so assembled pols and other community and interest group leaders, and in its seriousness, civility, candor, and humor, it was a thing to behold.
He called on John McCain first, led the conversation through assorted Democratic and Republican leaders, including GOP House leader Eric Cantor (who clearly looks in the mirror each morning and imagines he sees the next Newt Gingrich). Obama's masterful framing of the issues, the respect and deftness with which he treated and integrated all views, his shrewdness in knowing how much coveted national TV airtime he was giving even to those who disagreed with him...all of this amounted to a new model of presidential leadership that I think we're going to see much more of.
Obama is trying to create a climate in which our real long-term challenges can actually be talked about and addressed. These necessarily involve finding ways both parties can work constructively together, in spite of their simultaneous ambition to clobber the other at the polls. This bipartisan gambit - a determination to create a new space in our political culture where real problem-solving can take place across party lines -- is at the core of Obama's real audacity (a point I argue in a Wall Street Journal op-ed on Tuesday, and which I think many liberals who've bashed Obama's GOP outreach have failed to appreciate).
It gives me real hope even amidst the bad economic news because Obama's eye is plainly on long-term problem solving -- which is what our economy needs -- no matter the day to day fears and rumors that hold so many Wall Street traders in their myopic grip.
Always Nice To See
Make-you-think column by Harold Meyerson in the Post on how unions might have mitigated today's woes in context of the US-China imbalances. Highlights:
At the center of the global meltdown, then, is the misshapen economic codependency of the United States and China. Each has followed a fundamentally unstable economic model, with one nation suppressing wages so that it could export more and the other living on borrowed funds so that it could purchase more. Despite the sharply different roles that each nation carved for itself, though, a shared characteristic allowed them to chart their ultimately disastrous course...What do the United States and China have in common? They are the only two major economic powers that are resolutely hostile to unions....
But suppose that China and the United States did have powerful unions. In China, such unions might have pushed for higher wages, social insurance and more domestic consumption. Here, such unions would have preserved more of a manufacturing sector and boosted wages in the service and retail sectors, so that American consumers could have relied more on income than on credit to make their purchases. The two nations would have had more sustainable economic strategies.I'm not sure he's right, but I'm also not sure he doesn't have an important point. Worth mulling, especially for those who reflexively oppose unions.
Shocking bank factoid of the day
While TARP has been generous with bank holding companies, these companies have not been so generous with their banks. Four large holding companies — JP Morgan, Citigroup, Bank of America and Wells Fargo — initially received a total of $90 billion in TARP money in the fall, but by the end of 2008 they had contributed less than $15 billion in equity capital to their subsidiary banks....[This] means that when it comes time to recapitalize banks there is a bigger hole to fill, and when banks fail there is less capital available to meet the government’s obligations to insured depositors and other creditors. Keeping money at the holding company may benefit its shareholders, but it is costly for taxpayers.If there's a credible rebuttal I'd like to hear it. Otherwise this looks like (yet) another source of justifiable outrage in the way the bank bailout has been structured to date.
The Voodoo We Need
Trouble at Treasury?
Obama's Bipartisan Gambit
So many folks -- including the usually sound Paul Krugman -- seem to think this goal of bipartisanship is a sucker's game. I disagree: it's the essence of the change Obama can bring to the country, and a measure of his audacity that he's willing to try. He also plainly feels this in his bones -- witness the long riff at the press conference on why conservatives need to get past their "money doesn't matter" canard on schools even as he challenges liberals to get past their resistance to making systemic reforms in exchange for new investment. A lot of folks think getting both parties to to come together is a naive fantasy, and that Obama is just giving small groups like the moderate Senate Republicans undue power in the current stimulus battle, for example. This critique is shortsighted. Obama has his eye on a bigger prize -- literally changing the political culture in ways we need if we're to tackle a host of major challenges -- and he's taking risks to set that tone from the get-go. It's a big wager, but when your real project is to redefine the political center in the country, it's essential.
More on this -- maybe a column -- when I have time to develop the thought.
Capital, Lloyd, Capital
Much of the past year has been deeply humbling for our industry. People are understandably angry and our industry has to account for its role in what has transpired...Financial institutions have an obligation to the broader financial system. We depend on a healthy, well-functioning system but we failed to raise enough questions about whether some of the trends and practices that had become commonplace really served the public’s long-term interests.
But in a 1000 word piece he had scarcely a word for capital adequacy. If all the casino gamblers on Wall Street had been forced to rely on equity instead of leveraging up 30 or 40 to 1, the impact of a price decline in one asset sector -- housing -- could never have brought down the entire economy. How can one of the chiefs of Wall Street weigh in and not make this central to the lessons he says we should learn?
Blankfein also is a master of understatement:
...complexity got the better of us. The industry let the growth in new instruments outstrip the operational capacity to manage them. As a result, operational risk increased dramatically and this had a direct effect on the overall stability of the financial system.
Well said. Still, it will be interesting to see how Goldman lobbyists react to efforts to sensibly reign in bank discretion in these matters.
The Lerach Solution
Whatever else you may think of Lerach, the guy scares corporate America, and he knows how to use that fear to get big settlements for his clients. Today the U.S. government is the client that needs him, in its role as major shareholder of all these badly behaving banks. Lerach's skills are too perfect for this moment for him to be paying his debt to society sitting in some country-club federal prison. Let Lerach reduce his time by bringing the cases that are tailor-made for his particular brand of hardball.
Until now the president's men have made wimpy noises about it likely being "hard" or "impossible" to claw back these recent bonuses, not to mention the other bogus zillions many bankers made while wrecking the economy. Sic Lerach on them and this entire conversation will change overnight.