Apologies and Update
Three weeks ago, my week of postings on the material in the new 2009 edition of Bad Money was truncated by the schedule of my book tour. As a result, I didn't get to my intended last commentary - the dangerous analogies between the 2007-2009 disaster stage of U.S. financialization and the earlier decline-of-empire political economics of Britain, Holland and treasure-galleon Spain.
Usual business-cycle patterns no longer apply. The 2007-2009 implosion occurs in a very different context than the 1929-1933 events around which Fed Chairman Ben Bernanke has built his resume and cast himself as a second-depression crisis manager. I appreciated your comments and reactions back in early April, and hopefully tomorrow's posting will stir another round.
Politically, I think the Obama administration's financial policy situation has improved, less because of the rise in public confidence, which could tumble again, than because of evidence that White House perceptions of the financial bail-out have become more practical. The tougher line on banks viz credit cards and the seeming decision not to ask Congress for more bail-out money are both pluses, as is Obama's criticism of the hedge funds et al in the Chrysler bail-out. Whatever the underlying intentions, the p.r. is better.
He hasn't chosen "not to ask Congress for more bail-out money."
He's concluded he hasn't a snow ball's chance in Hell of getting any -- anymore than he got the mortgage cramdowns.*
* 60% plus approval ratings and he's silent when it comes to spending some political capital in support of his campaign pledge.
May 4, 2009 2:09 PM | Reply | Permalink
I can't totally damn Obama when it's obvious that Congress is in bed with any one who throws money their way and then plays quid-pro-quo with each other so no one blows the whistle.
At the risk of sounding totally cynical, I wonder just how many people vote for these clowns only to get their own piece of the action.
Makes one wonder if the voting public is just as corrupt as their government.
C
May 4, 2009 9:01 PM | Reply | Permalink
When the issue of paying the AIG bonuses was raised we were all lectured about the sanctity of contracts and how it's important to pay people for work they've already performed.
And yet now, the auto workers will be asked to main concessions and we'll be told that's just how it is.
May 4, 2009 2:12 PM | Reply | Permalink
"A foolish consistency is the hobgoblin of little minds." Barack Waldo Obama
May 4, 2009 2:43 PM | Reply | Permalink
"The test of a first-rate intelligence is the ability to hold two opposed ideas in the mind at the same time,and still retain the ability to function." F. Scott Obama
May 4, 2009 3:32 PM | Reply | Permalink
Au contraire, destor. Haven't you heard? Obama gave away the store to the UAW!! Why, they get 55% of Chrysler, as a thank you from Obama -- you know, for getting him elected. (55% of a failing company, instead of the promised billions needed to fund their retirees' health care needs -- that's a good deal, isn't it?)
-- ARG
BTW, nice new avatar!
May 4, 2009 3:26 PM | Reply | Permalink
Mr. Phillips I agree with your earlier post that "the average American knows little of the dimensions of the financial sector aggrandizement and misbehavior involved." And also "complicit politicians and regulators have to talk about $100 billion here and $1 trillion there even while they pretend that it's all under control and that the run-amok financial sector remains sound."
You also mention "during Alan Greenspan's 1987-2006 tenure as Federal Reserve Chairman, financial bubble-blowing became a Washington art and total credit market debt in the U.S. quadrupled from $11 trillion to $46 trillion."
Yesterday Kevin Drum was wondering why there were rumors that the stress test will reveal Citi, one of the worst cases, needs to raise only another $10 billion in private capital when everything else he's seen pegged it as more like $100 billion.
I think it might be that governments and the financial sector all over the world aren't coming clean about the extent of the damage not because the financial sector has bought off the political sector but because if we all knew the extent of the damage confidence in both systems would utterly collapse.
May 5, 2009 10:39 AM | Reply | Permalink
Obama did ask for more bailout money:
===============================
http://www.huffingtonpost.com/2009/03/24/reid-split-with-obama-no_n_178732.html
Reid Splits With Obama: No Bailout Funds In Budget
Majority Leader Harry Reid (D-Nev.) said Tuesday that he doesn't object to the removal of $250 billion in bailout funds that Obama had requested in the budget in case of a financial emergency.
================
The money listed as $250 billion is really $750 billion, represented as less under the premise that $500 billion would be returned by the financial firms.
May 5, 2009 1:58 PM | Reply | Permalink