the audacity of hype

The change, it had to come

Yes, Obama is not yet President, but you seem willing to judge his Presidency already.

Without defending the auctions Paulsen has taken, or his explanations, it is not obvious to me that Treasury did not need authority to disburse billions of dollars to shore up the financial system. Nor am I certain there would not have been a financial crash without the interventions that have occurred. I don’t believe that Congress had a clear idea about how best to spend the money, so I can’t agree they should have left Treasury with little or no discretion.

There seems to have been a consensus, even among Paulsens critics, that the decision to allow Lehman to fail was a mistake. How then do we assume that pumping tens of billions into the financial firms was obviously wrong? Insufficient? Sure. But unnecessary? That’s not clear at all.

If Obama had been President, I think it would have been reasonable to ask for authority to pump billions into the financial sector. What the proper balance is between direct capital injections and efforts to modify mortgages, I have no clue, but I don’t think the correct answer is zero.

I don’t read this as a judgment about his presidency.

The FISA decision was made while he was a senator and candidatae for the presidency. He claims to have believed that the FISA bill was better than the alternative. Either he’s didn’t know better, or he thinks we didn’t know better.

Treasury did need authority — if they hadn’t they wouldn’t have gone to Congress. Bush doesn’t ask for authority he doesn’t feel he needs. However #2 above reads:

Ensuring Paulson got his blank check taxpayer slush fund without mortgage relief

That’s the rub. Paulson’s idea of “mortgage relief” is a program that is not yet up and running and with no guarantee of a real fix. Compared to the program offered by Bair, Paulson’s is weak, weak, weak.

Lieberliar – I’ve been wrong about Obama before. There have been times when I wish he had been more aggressive with republicans. In the end he has seemingly gotten what he wanted (what is best for a centrist politician) by being nice, and looking for areas of reconciliation. As far as I can tell, he is the middle, he plays to the middle and whether it’s our “middle” or not — it’s his.

He’s not going to be our dream come true. He’s going to be a centrist president with whom we disagree on occasion. We have not yet figured out the way to influence his decisions but it seems that the very first thing we must do is choose our battles well.

In the scheme of things, getting rid of ole Joe probably isn’t on the top of the list.

I’m with pach, nobody has judged obama’s entire presidency, all we have done is judge some of his huge decisions

he is failing at the big ones, the economic buyout was a rediculous miscalculation on obama’s part, everyone knew it, when obama signed on we thought maybe he knew something we didn’t and the buyout might work

we were right, he was wrong

fisa, well I don’t want to keep kicking myself in the stomach but barack abandoned his constitution and his oath to us.

lieberman?…I have no frigging idea what is on obama’s mind, the man has stabbed him in the back and will in the future, he has impeded oversite and will in the future, he has impeded progressive law and will in the future

so far on all the big decisions, obama is a republican

we are not republican’s here on this board, we do not give a “pass” simply because obama has a “d” and we won’t wait until his entire presidency is over

we will judge, advise, decent or concent on each and every big decision, and THAT is the way to really govern

so far, obama is bush

Well, he’s not Bush, but you’re right that I haven’t made a judgment of his presidency. I am looking at recent behavior, which actually is consistent with his behavior since becoming a senator.

we are told he will not be investigating war crimes, we are told the wireless invasion and theft of our information will continue

he may not be bush in the fact that obama certainly knows what he is doing and bush did not, but so far he is doing the puppettmasters bidding

Just to pull one data point whitewashed out of the last year’s discussions of Obama’s record, here’s the anti-war candidate’s record of actual expenditure of political capital on behalf of the actual anti-war pioneer candidacy:

Barack Obama
Quite possibly the biggest disappointment … period.

While on his book tour, he was in NYC one day, had a scheduled day off, and appeared in Massachusetts the following day. Yet he couldn’t make time to stop in the state between the two on his day off. We made it explicitly clear he was the single senator we wanted in the state above all others.

He declined.

Eventually, we asked Senator Obama to send out an email for the campaign to his Connecticut list. We created a culture in which emails became news (much like we did with the blogs in the primary). They made it entirely clear that he would basically not even mention Joe Lieberman’s name in the email, let alone take him to task for his unfortunate position on the war in Iraq. This was disappointing, but I wasn’t going to be spiteful. They sent the email, and as I hoped, the press came calling. Our Press Secretary, Eddie Vale, was asked how many people the email went to. He looked on the back-end of the website and saw the number of click-throughs to the landing page I created. He answered “about 5,000.” Within minutes of the Associated Press piece going on the wire, I received several phone calls from Obama staff. They were none to pleased about the 5,000 number. Essentially, Obama could be seen as helping, but not helping THAT much. His staff apparently made it clear that the email only went out to 225 people in Connecticut. That’s it. The next day we were subject to a correction in the papers and ridicule from Lieberman’s campaign and corners of the right-wing blogosphere.

It’s also important to note that Obama’s email came only after a tremendous amount of pressure built up from portions of various online communities who “threatened” in behind-the-scenes conversations and open discussions online that support for Lamont would be viewed as a part of a “presidential checklist.”

Everyone should also know that Robert Gibbs, part of the group that ran the infamous Dean/Osama ad during Iowa 2004, is now Barack Obama’s Communications Director.

i don’t know anyone who was saying that action wasn’t needed. it was the specific action – to bail out wall street with a blank check – that was so objectionable. and which has, surprise, been used to reward paulson’s buddies but do little for the crisis other than attempt to kick the can down the road or even re-inflate the bubble.

the complaint i and others were making – at the time – was there was no accountability (the oversight provisions were a joke), no transparency and no process for re-regulation to address the underlying problems. these aren’t subtle economic issues, these are basic issues of smart good government.

it wasn’t a bailout – it was a sellout

and exactly what naomi klein warned us of in her book, shock doctrine, last year.

pach – thought you want to know that hugh has another of hist lists going, this is from a couple of days ago, so it’s already out of date:

Obama:

1. Reneges on pledge and backs FISA Amendments Act
2. Is instrumental in getting $700 billion Paulson bailout passed
3. Picks Rahm Emanuel to be his Chief of Staff
4. Names the pro-torture John Brennan to head his national security transition
5. Lobbies Senate to save Lieberman’s Chairmanship of DHS Committee
6. Has Robert Rubin and Larry Summers who deregulated markets under Clinton and set up the conditions for the current meltdown as his economic advisers
7. Wants to escalate the war in Afghanistan
8. Has Dennis Ross as his Middle East adviser.

it’s not about judging a presidency which hasn’t started – of course we can’t do that. it’s about judging actions and event – what we do here for every politician. no reason for us to differently wrt obama.

1. Did banks/financial institutions need bailing out?

2. Did anyone in Congress have a clear idea (other than some very large number — e.g. $700 billion) how much this would take?

3. Did anyone in Congress know enough about the financial sector to specify how much Treasury should devote to each institution?

I think the answers are Yes, no and no. The conclusion is: you give the Treasury a ton of money and hope they (1) know what they’re doing and (2) use the money wisely. That’s what they did. When you add it up, it’s like a blank check — and the reason Congress hands out blank checks is that they don’t know the answer and hope someone does. I believe that’s where they were (and still are).

At the time, my posts said (1) make sure you have some oversight after the fact, so that someone has to explain what they did and (2) don’t allocate the whole thing; do only a part and have an off-ramp so that you can withhold the rest until you see if the first part was working as you hoped and (3) add a piece for homeowners. Congress sorta did all three, but not well enough.

Let’s not forget that the Republicans had laid a trap for Obama. They wanted McCain to vote against it while Obama was voting for it, knowing they could demogogue the issue. Given it’s huge unpopularity, that could have been an effective strategy and might have reversed Obama’s advantage on the economy. Obama’s (and Democrats’) actions at the time were clearly designd to get McCain and enough Republicans to share ownership of the problem and the solution, thinking that since something had to be done (but no one was sure what), everyone needed to take responsibility. I agree with that.

Since I believe something had to be done, done quickly, and done with brute force, I don’t see an responsible alternative strategy that was available to Obama. I think obama should be praised for his handling of this — even though the bailout was no well designed, has been mishandled and is not transparent and has not opened up credit as we hoped. It stopped (for now) the crash, and that’s what it had to do.

If you believe quick action was not needed, that no crash was imminent and that that was a scam, then I can understand how one would come to different conclusions. The problem is, how do we know?

is this the place where I confess to being a twitterpated fangirl in the hoursdays following 11/4/8 ?!?!?
and where do I get the collar so as to hang the carcass of that “thing with wings” around my neck ?!?!?

You’re asking the wrong questions.

Many people, with direct access to Congress and without, described what was needed, in private and in public, but were drowned out by the corporate media forces and Obama’s very heavy hand in aligning himself with those forces.

People wrote on this site what should be done, other people talked with staffers on the Hill, others wrote very publicly what was wrong with the Paulson-Frank-Obama “plan.” And lo and behold, exactly what they wanred would happen has happened.

Saying the choice was the taxpayer theft versus nothing is reiterating the frame of the shakedown artists. Obama could have led and reframed the conversation, all on his own. But he didn’t. It’s hard to reconcile your description of Obama as a passive victim of events when he was an active force in shaping events.

So the point of this is not to draw parallels with Bush?

I never suggested Obama was passive. He laid out several conditions, some of which were included, others not. And he helped shape the politics by getting Republican buyin. That was important.

And you’ve now equating me with advocating taxpayer theft and shakedown artists. Nice.

I agree there were other voices with arguably better ideas, but they were not all the same idea — there were lots of ideas, many conflicting, once you get beyond this site. Congress’ problem was that there was no clear consensus, no common understanding, although there was wide agreement that no one understood how Paulsen’s original proposal could work.

Take Krugman: The core of Krugman’s argument, when he defined the five stages first on his blog then in his column, was — return to step two and solve the capitalization problems by injecting capital directly, rather than buying the toxic assets (especially at market value). I thought that made sense and said so. The legislation allowed Treasury to do that.

There was no consensus in Congress that that was the right thing to do, but it turns out, that’s mostly what Paulsen did — he gave up trying to buy toxic assets and followed the Krugman argument. The legislation allowed Treasury to take equity positions, (the taxpayer protection element that many demanded) but Paulsen chose not to take controlling equity/voting.

This is mostly Monday morning quaterbacking. At the time, there was no common view of how to solve this whole thing, and there still isn’t. But let’s blame Obama.

the complaint i and others were making – at the time – was there was no accountability

my complaint went quite a bit further then that, I said we are giving more of our money to the very people who stole it in the first place

I did not want paulson to be a party to the sellout, I did not want any plan bush came up with to be approved at all, I did not want the lenders getting their dirty fingers on any of my money.

the bailout needed to be a fund which the lenders could tap on a case by case basis, and a product needed to back the loan.

and obama was informed of all that was wrong with the sellout, yet he insisted we needed it immediatly

This is mostly Monday morning quarterbacking. At the time, there was no common view of how to solve this whole thing, and there still isn’t. But let’s blame Obama.

this is not true, we were all quarterbacking long before the sellout was made final

Reasonable progressives may disagree on what Obama should have done regarding the original bailout plan, but I don’t think his positions on Lieberman, FISA, and the Clinton rehash appointments can be viewed in anything approaching a positive light.

It’s important for us to make clear that Obama is not betraying the “Left,” the “netroots,” the “base,” or any other such formulation. He’s short-changing peace, the Constitution, and the best hopes for truly rational and equitable foreign and domestic policies.

I never expected a whole lot more from him but must say I’m surprised by the extent of his nonvisionary and uncreative appointments, and by all the timidity masquerading as magnanimity.

We need to hound him and ride him, as we always knew we would, not in the name of placating progressives but in the name of serving the best interests of the hurting citizens of this nation and world.

It’s important for us to make clear that Obama is not betraying the “Left,” the “netroots,” the “base,” or any other such formulation. He’s short-changing peace, the Constitution, and the best hopes for truly rational and equitable foreign and domestic policies.

good point!

this is not about us, , our children, our grandchildren, our country and her constitution

obama is drawing the lines of contention himself, he does not get a pass simply because he campaigned as a democrat, we would be going BALISTIC if this were a republican and we MUST hold this man’s feet to the fire if we are to come out of this with our country in tact

And you’ve now equating me with advocating taxpayer theft and shakedown artists. Nice.

Show me where.

The ideas offered by economists and policy wonks were not all the same but they all included the same basic principles: accountability, regulation, equity stakes and mortgage relief. They had different formulas for accomplishing thiose things, but none of those things were included in the bill Obama whipped for.

I’m arguing with the ideas and data you bring to bear in support of your argument. If I made any characterization of you, show me the text.

Can we please argue the ideas and facts without people assuming personal attack? Or is the point that any critique or discussions of the record must be taken personally?

This is mostly Monday morning quaterbacking. At the time, there was no common view of how to solve this whole thing, and there still isn’t. But let’s blame Obama.

This reminds me of a riff on Alan Greenspan. He said that he had the smartest guys in the financial community working for him and if they didn’t see the financial collapse coming than no one could. When someone pointed out to him that, in fact, there were people who had predicted it, Greenspan responded that at the time a lot of people had said a lot of things.

I’m not sure what is wrong with Monday morning quarterbacking, especially when the game was on Tuesday. As for using a lack of a common view as a defense, I suppose the same could be said about torture, the Iraq war, and domestic spying.

And I have no problem blaming Obama. He was the major backer of Paulson’s bailout plan. Whom else are we to blame than the person most responsible for it? Isn’t holding people accountable what we in the progressive blogosphere have been about for the last several years?

The truth is that the roots of the current crisis go back as far as the Reagan Administration but most of the specific acts which set us up for the meltdown took place in the Clinton and Bush Administrations. Evidence of a major dislocation, a bubble in housing, was abundant throughout 2004-2005. In 2006, several mortgage writers went through a slow motion collapse which they accomplished in early 2007. In June 2007, the first Bear Stearns funds went belly up and the bubble officially burst with the freezing of the BNP Paribas funds on August 9, 2007. That was over a year ago.

It wasn’t just Paulson who came to Treasury from Goldman in mid-2006 who dithered it was the Congress. Now it may come to a surprise to some but the Congress has committees that are supposed to exercise oversight of the financial industry. And although probably overly optimistic on our part, we might have expected that the members of those committees or at least their staffs had a clue. You know people like Chris Dodd and Barney Frank.

In March 2008, Bear Stearns failed and really not much happened. Since then we have had a series of failures and both the Congress and Paulson have been consistently behind the curve. So when Paulson showed up one day with his demand of “Give me $700 billion or I let your financial system die”, about the only ones who were caught by surprise by it were those who weren’t paying attention. That Paulson said that he had been working on his plan for 6 months and that it was only about 3 pages long sort of blew by everybody just as the fact that Congress had known about the same things Paulson did for as long as he did and had not even come up with 3 pages.

But an election was on. So the Congress gave a Treasury Secretary who had blown every opportunity to mitigate or forestall the crisis more money than was in the defense budget to take the issue off the table for a couple of months. Now this may pass for good governance in some universes, but not in any in which I wish to live. But of course if they had not acted the whole financial system would have collapsed. This has been Paulson’s mantra since his bailout was announced. And yet curiously he has not used that money or any of his other powers to address a single one of the underlying problems which created the meltdown. And Obama? After being instrumental in getting the bailout passed, he now says that we only have one President at a time and he can’t do anything until January 20. This gets back to something I have remarked about Obama. When he wants to get something done, FISA, the bailout, Lieberman, it gets done. But when he doesn’t want to act, he throws up his hands and says gee, I wish I could do something here but it’s not my call.

i think there are two issues here that are getting confused: 1) judging obama before he’s even president, and 2) what we think of the bailout.

here’s what it looks like to me: we’re both judging obama on what he’s done so far (not, i repeat, judging his presidency) – it’s just that we have very different judgments. imo, the issue of judging obama is a strawman because we’re all doing it. so, i’m going to put that one to the side for the moment.

for #2, the bailout. if you think obama handled it well and i think he sold us out, then here is where i think our real disagreement lies. i agree with pach that, the question was not between no bill and the one that was passed, and i’ll add that marcy kaptur and pete defazio attempted to put forward an alternative (the progressive dems working with republicans!). but as i’ve repeatedly tried to stress – one does not need a deep understanding of the economics to see that the paulson-dodd-frank-obama bill was not about financial stabilization. the lack of accountability and transparency made that perfectly clear and reading the so-called “oversight” provisions made me want to either laugh or cry they were so clearly meant as cya and not actual oversight. they were and are a joke – and this was clear at the time.

at the minimum, without getting into the economic situation, there could and should have been some transparency and accountability built in. that congress would add 400+ pages to paulson’s proposal without this and that obama had plenty of time to twist arms to get votes, but not to have someone write a few pages of actual oversight (the kind that comes with accountability) said to me that they were in on the heist too.

the whole process reminded me of the decision to give bush his blank check for war with iraq. at that time i used the analogy which applies the bailout too – just because there is a storm on the horizon and one thinks that that the big tree leaning over the house is about to fall over is in no way an argument for giving my 6 year old nephew the chainsaw, telling him to get to it and then driving off for the day. this is just not competent governance – regardless of the merits of the bailout or the war or taking down the big tree.

now i do have lots of problems with how the economy has been managed (by congress and the potus going back before the bush years) but without going into that, do we really disagree on what oversight and accountability we have the right to expect and demand?

We don’t disagree on the need for oversight and accountability. Nor do we disagree on how badly the Administration handled it’s approach to the bill. I make no arguments that the final bill did all it might have. My points are far more modest:

This is a really hard problem; arguably unprecedented.
No one has sorted this all out.
Even the most well meaning are not yet in agreement beyond basic outlines.
There is a lot of uncertainty about both intended and unintended consequences.

Obama does not have, did not propose a “solution.” He proposed principles, which happen to match up with some of yours — accountability/oversight, tax payer protection, no unjust enrichment of the bank execs, regulatory reform, etc. Some he said “do now” others “later, but do them.” He could say that at the time as the man most likely to be President in January.

We may disagree about how important it was to move quickly (and hence, not think everything through and make mistakes). At the time, we didn’t know how imminent further damage was, but I felt there was a risk of delaying much longer. I have no idea whether I was right, because we can’t recreate the counterfactual.

I believe there was no general agreement about how to solve the problem (and there still isn’t) even among those who call themselves progressives. The “Progressive + Republicans” plan was different from Krugman which as different from (but not inconsistent with)Ian Welsh, who proposed something I thought had a lot of merit; it was not tried but it focused on establishing a floor price for mortgages and providing mortgage relief. Perhaps I misunderstood it. Obama agreed with the last piece — mortgate relieve — but never specified how to do it, because there was no obvious choice. There are others now trying to focus on the foreclosure issue; I’ve seen several plans. Bair’s seems okay as far as it goes, but it’s not identical to Welsh.

I don’t agree with Hugh that this is comparable to Greenspan’s ideological insistence on ignoring lots of well known, respected people who were warning about the housing bubble and others warning about unregulated derivatives. Those critiques were clearly out there from people who should have been listed to, but Greenspan ignored them.

As for Pach, he used language to characterize opposing views; it he new claims he didn’t mean it to apply to someone who actually questioned his conclusions, then I have to accept that.

I described the views, but did not characterize people. Repeating your claim does not give evidence to support your claim.

Regarding your response to selise, I disagree with your premise that this is all such hard math and no one had time to get their heads around it. I know many people who did, I know people who talked with Barney Frank’s staff, I know the Economic Policy Institute is out ther and has been writing clearly about this eventuality for a long time, there was no dearth of good ideas from which to draw.

There was only lack of political will, and the very idea that everything was all so confusing and we just needed to do something, anything, fast and let Big Daddy Paulson sort it out was a media creation and part of the very transparent campaign to con elites into taking stupid action, transferring public wealth to rich private hands.

You can say you believed in the CRISIS ACT NOW DO IT THIS WAY claims, and you can say Obama didn’t know any better than to follow the lead of what Bush went on television every morning to sell to the public, but that’s hardly a ringing endorsement either of Obama’s judgment or leadership abilities, at least as evidence by the available record.

i don’t think oversight was too hard or complicated. or even some of the basic economic issues.

wrt to the argument that its too complicated… the problem i have with that is that i don’t know economics, i only started paying attention to how government works a few years ago and there are at least a gazillion people smarter than me without going very far to look.

knowing all that makes me quite open to the argument that i just don’t get it iff it comes with an explanation of how the economy (or politics or governement) works. would love to know more/better.

but because i’m about the last person who should be able to comprehend what was going on (all i did was watch the hearings, the floor debates, read some of the bills and have smart people here to bounce ideas off of). surely our political class knows more and has access to better experts?

but no. just like with the iraq war. if someone like me can get it (at least in part) then i don’t buy it’s too complicated for the likes of obama or dodd or frank.

“Saying the choice was the taxpayer theft versus nothing is reiterating the frame of the shakedown artists.”

Your words, Pach, not mine.

“I described the views, but did not characterize people.”

So, “shakedown artists” are not people, and you’re not saying a word about those who “reiterat[e]” them. And when you reply to my prior statements, which did not use those words, as “saying the choice was the taxpayer theft versus nothing,” you weren’t referring to me.

How reassuring.

I wish I believed that we know how to solve all the really hard problems, or that there is a group of grownups out there who totally get it and just need to be put in charge.

Unfortunately, in the extremely narrow field in which I actually know a lot, my experience is that (1) the really hard problems are virtually unsolvable except at the margins (so that’s where you start) and (2) even the people I trust most to work on them have never been given the mandate. The only equation I know with certainty is: Technical complexity plus conflicting economic interests plus political process = imperfect solutions.

Scarecrow, I have no idea how you make the inferences you make.

Shakedown artists = Paulson et. al.

Repeating the frame is the logical error.

One who repeats the frame is not by definition a shakedown artist. One who repeats the frame, who is not among Paulson and posse, is making a logical error. Unless you believe I characterize all who make logical errors as somehow complicit in the shakedown, based on your own presumptions of my meaning but no scrap of my text, I don’t get your deductive process.

I was of course referring to you re: the framing of the choice as having been between the “taxpayer theft versus nothing.” That’s my characterization, again, of the Paulson plan and your subsequent logical error, that the only options available for action were the (marginally modified) Paulson plan or nothing.

I make errors all the time, as we all do, so unless you take it as a personal attack to have someone disagree with your assertions and conclusions, I really don’t understand the inferences you draw, because they sure weren’t written into or implied by my text, and were not part of my thinking as I wrote.

do you really think oversight is such a hard problem?

that’s what i’m having the most trouble understanding.

Then we have a problem. If it’s true that one of us doesn’t understand logical inferences, and is prone to “logical error,” then there’s little to be gained from further discussion, because I probably can’t figure that out. I surrender!

No,oversight is not the major problem, and I suspect once they get the overseers in place — they’ve only recently been appointed — we won’t find as much a problem on that score. But if the oversight is transparent, I suspect we’ll be appalled by what they uncovered: the fact that everyone was just doing what they thought was best without having a clear idea whether it would work or not.

Sigh.

Again, I argue you’ve made an error in this case, and you take it as, not an argument about a situational error, but an an assertion by me of some pervasive and permanent characteristic of chronic error or incapacity. But that’s a line of thinking entirely alien to me, and if I believed it, I would certainly never bother to discuss with you at all, which has never been the case.

but if oversight is not hard or complicated – then what is the problem with judging obama (as well as dodd and et al.) on their gross failure in this regard – that they were willing to give a blank check for $700 billion to paulson and the bush administration with the only “oversight” a complete joke?

My take on FISA (although I did not agree with his vote) was the following: I think if he voted against it, something would have happened. Giving the Repugs the “strong on terror” narrative and the “Dems are soft on terror” election spin to throw at voters to win the election with the fear card. “Hope” does not capture the mind when one feels real threat.

There’s a great deal I’m shaking my head at, but I am also telling myself to hold on just a bit.

but the fisa bill of june need not ever come up for a vote, or if one was needed, why not the decent bill from march?