Martin Kenney
by Martin Kenney
Mon Jul 13th 2009 at 8:35am UTC

Pollyanna Has All the Friends…

…Cassandra is universally disliked (h/t to Bob Eberhart).

What are we to make of this poll that shows Obama rapidly losing altitude with voters, particularly the Independent voters? Just as Obama was being inaugurated, and immediately afterward, I wrote a number of posts on this blog warning about his mistakes in taking ownership of the Bush mistakes. After taking heat from my friends and the incredible (the root word here is credit, which means trustworthiness etc.) rise of the stock market, I decided to keep my mouth shut.

Now we are nearly six months into the new presidency and what do we have? Obama has invoked Bush era Imperial Presidency secrecy rules, signing statements, and even willingness to torture. The CIA has admitted lying to Congress, the direct representatives of the people, and there are no prosecutions. Unemployment that is reaching ever new highs, and the green shoots the Administration promised shriveling and dying. Wars in Afghanistan and now Pakistan are spiraling downward. For those who admonished opponents of these wars that there was no choice, I can guarantee you that the war will be lost and we will be worse off for having gotten involved. It is existential bad faith and terrible politics to say there are no choices. The Iraq War continues on. Our treasure is being squandered even as we are going bankrupt as a nation.

The real catastrophe that threatens to swamp Obama are the bailouts without end to Wall Street and, even more important, the increasing perception among Americans that Wall Street has become a rigged casino where citizens, pension funds, and 401Ks go to be sheared. Whereas Obama should have begun prosecuting executives who lied materially about the status of their companies, e.g., Lehman Brothers, Bear Stearns, and AIG, they have so far been given a free pass. There are stock market rumors about front running in on a massive scale, tip-offs from the Federal Reserve to selected banks about forthcoming actions that allow the equivalent of insider trading, etc. This is serious stuff.

It was these abuses that were the core of the Roosevelt clean-up of Wall Street. There have been massive bailouts, but no programs such as the Civilian Conservation Corps etc. to put people back to work.

Consider the observed pecking order of bailouts: Wall Street gets trillions; GM and Chrysler 100s of millions; state and local governments tens of millions; ordinary citizens very little. If Obama is to save his presidency, then he needs to fight as hard for the Main Street as he has for Wall Street. Let’s hope the newest polls give him the message.

How are you folks feeling? Has the Obama Administration been doing the right things? Is this the way forward for the country?

19 Responses to “Pollyanna Has All the Friends…”

  1. Wendy Says:

    If he can get some sort of medical coverage for all Americans through, many will forgive the trillions and billions to Wall Street and GM / Chrysler and the continued debacle in Iraq/Afganistan/Pakistan. I think health care reform may be exactly what he’s counting on as “the silver bullet” for the next election.

  2. Chris Says:

    I think Obama believes what Wendy says, but after a year or two of 20% unemployment (measured correctly) he’ll have to knock some heads on Wall Street, the military, and insurance companies to survive.

  3. Martin Says:

    Wendy,

    This is a great comment. The devil here will be in the details. If, in some way, he is able to bring down the cost of health care by cutting out middlepersons particularly the insurance firms, he can save money and keep the Federal budget under control. Still probably cannot afford the overseas adventures, but might be able to get by.

    If he cannot get costs down, national bankruptcy and an IMF solution will be inevitable. That will mean an IMF solution cutting all further social spending and a descent into near barbarism. Unfortunately, this is probably the outcome of his inability or unwillingness to put citizens before the banks and to wrap up the wars.

    What he does about helping California will be the key “tell” (regardless of whether CA “deserves” help). If he lets it suffer with no assistance, he will show that Wall Street and endless war is more important to him than people. With the current path, the Democrats risk annihilation in the midterm elections, people out here are very angry.

    The analogy I am reminded of is someone skating on thin ice with the cracks radiating out from the back foot while the skater is placing more pressure on the foot in an effort to accelerate to escape the cracks. We certainly hope that he makes it, but I find it hard to bet that he will.

    We have a lot riding on him.

  4. hayden fisher Says:

    It’s a tough world and rough economic climate. To think he would turn things around within 6 months would have been naive. That said, we do see a tilt towards recovery and a renovation of the financial system on the horizon. It will not be fast or without pain but we are probably in an embryonic positive-growth cycle now; certainly that was not the case 6 months ago.

    I agree with Wendy that Obama will be remembered most for he long-term changes he’s initiated. High-speed rail finally becoming a reality in this country. Health care reform. Target tax cuts; etc. And the revitalization of the American brand.

    Give the guy a break!

  5. martin Says:

    Hayden, Wendy, and Chris,

    In my estimation, we Americans are much too tolerant of our politicians. Hayden I disagree with you completely there are no green shoots, we are preparing for a brutal downcycle that as Chris says will take us toward 15% U3 unemployment and U6 will peak at over 25%. Those are depression numbers, moreover people’s earning potential is decreasing.

    We are on the cusp of something very dangerous and Obama is messing around in Ghana or where ever. I will wait to give my unvarnished assessment but anyone that thinks doubling down in Afghanistan can be successful deserves whatever befalls them…if it only befell him not us.

  6. hayden fisher Says:

    Afghanistan is a necessity although it would ideally be transitioned over to UN peacekeeping forces. We also do not have the benefit of receiving the intelligence reports and briefings he sees and receives.

    This economic crisis started in the credit markets. All of the markets went haywire in August of 2007, having been predicated on computer modeling algorithms employing faulty underlying assumptions and data. That, coupled with the recklessly deregulated Wall Street and neutered SEC, led to the collapse in the credit markets– if I can oversimplify. Employment is down naturally following a shrinkage in the economy, and dare I say, rare opportunity to divest aging and expensive senior boomers from payrolls. But we are witnessing a strong recovery in the financial sector that will yield to greater business velocity and the re-opening of the credit markets; which will lead to growth and the need to hire more employees. How can anyone look at the data and not see an obvious turnaround with an unfortunately long unemployment tail. Again, that long tail suggests that more was at stake in all of the blood-letting than mere response to economic crisis; my hunch is that many companies and firms saw an opportune time to trim the fat off their payrolls without being sued for age discrimination.

    Another testament to Obama– he may have transformed the American auto industry –time will tell– and perhaps we’ll see some marketable American cars here in a couple years or so. I am personally dubious on this one but at least our naked insistence that what’s good for GM is good for the country has been broken.

  7. Wendy Waters Says:

    On Hayden’s last point … maybe Obama reversed course by insisting “what’s good for America is good for GM.” I loved the fuel efficiency standards act that GM officials had to stand there and meekly applaud!

    Quite a contrast to decades of fighting safety and fuel regulations.

  8. NIkolai Kondratieff Says:

    Martin,

    Americans are too tolerant and they are ignorant. Celebrity has become the opiate of the masses. It’s pathetic when millions of people are more concerned about the death of an alleged child-molesting, drug abusing, masochistic, disfigured pop star than they are about the egregious behavior of their politicians and business leaders. The raping of American wealth will continue right under their noses until people wake up. What that will take is anybody’s guess, but right now it doesn’t look like it’s going to happen anytime soon. Unfortunately, Obama’s team and policies are NOT the answer (McCain/Palin wouldn’t have been either). Read Robert Reich’s piece on the lack of a recovery. It’s short and to-the-point. But most of all, he’s 100% right. There will be no recovery because you cannot return to an unsustainable status quo ante, which is what many of the policies strive for.

    Nik

  9. Buzzcut Says:

    Martin,

    Regarding eliminating the middle man, you need to look at both costs and benefits. The middle men are providing benefits. After all, Medicare and Medicaid have eliminated the middle man (the insurance companies) AND they have eliminated the profits made by insurance companies. Yet both programs are growing at unsustainable rates. Moreover, at least with private insurance, more medical care leads to better health (that’s the service the insurance companies are providing, making sure that the benefits of procedures exceed the cost). The same cannot be said for the big government programs.

    You know, the same argument you make was once made about socialism. Socialism was thought to be superior to capitalism because it got rid of wasteful profits, eliminated the middle man, eliminated the need to advertise, and provided economies of scale. Certainly, all 4 things could be said about, say, Lada, the Soviet car company. But nobody would confuse a Lada with a good car worth buying.

    In general, while no fan of Obama, I think you are being much too negative. His ego is such that he’s gotten in over his head, but I think that he’s going to learn from his mistakes.

  10. Michael Wells Says:

    I’m on the side of the “focus on the future, not the past”, although this may become impossible. If there have to be hearings I’d rather see the model of South Africa’s Truth & Reconciliation panels than prosecutions. There’s too much real work needing done to spend a lot of time in partisan warfare (and that’s what it would become.)

    Obama inherited huge problems that had been ignored or worsened for decades, like health care and climate change. Also the results of the incompetence and malevolence of the Bush Administration, like the two wars, the unbalanced economy and the alienation of almost the whole world. The financial crisis taking down banks and an auto industry that has been committing suicide for 30 years were immediate and demanding.

    The Iraq war was a horrible mistake and Afghanistan mismanaged, but immediate pullouts from either would be disasterous. Unlike Vietnam, there’s no government in waiting that can take over and prevent chaos. The Taliban came to power last time because of a chaotic multi-party civil war. And ending military involvement when it happens shouldn’t mean abandoning rebuilding either country.

    Not that Martin’s wrong. I just think in the scheme of things, some of his issues aren’t front burner. Any administration can count on two things. They will make many mistakes and face problems they didn’t anticipate.

    From starting on health reform and climate change legislation, to rebuilding our global standing and partnerships, to at least halting the financial meltdown, to things that would seem major in usual times like stem cell research and a Supreme Court nominee, I think Obama has done as much as anyone could.

  11. Martin Says:

    Hi,

    Thank you all for the comments. Michael, though we support so many of the same things we always end up disagreeing. This is my take on the situation.

    We Americans focus on the “future” and seem to not be interested in the past. This provides us with crackpot optimism. Obama declares to all the world, he is different from the past so forget about the past and take me at my word. This strikes most of the world as naive and suspicious. They think this is a “con” Never mind what we did before, just accept the “moment.”

    I can guarantee you that Iraqis, Iranians, Afghans, and Chinese remember the past and operate on long time scales. Without thinking about and rectifying the mistakes of the past, one blindly blunders into the future. To ignore crimes of the past is to sanction their commission in the future.

    Afghanistan was and will be Afghanistan yesterday, today, and tomorrow. Many years ago, I traveled extensively there and can tell you it was difficult to control — impossible for outsiders. The Taliban IS a government in waiting and it is approximately what I would expect to work there. The Taliban did solve the chaos of the previous period. When a situation is lost doubling down only deepens the losses. Michael we will accept the Taliban there because we will have no choice. We might as well get on with accepting it.

    We need to think creatively about how to handle a post-NATO Afghanistan governed by the Taliban. What is it we can do in the context of that reality? We will not change the reality.

    Unfortunately, on the critical issues — the economy and wars — Obama has not been creative but conservative. Not reconceptualized the problems, but rather accepted what the conventional wisdom is. Creativity in my book is reconceptualization, moving outside the box, accepting and working with the reality, but reworking it. Perhaps, what is most disappointing is that I have heard nothing new from him or his team.

  12. hayden fisher Says:

    I agree with Michael, sans some of the negativity and excessive Bush-bashing. Bottom line. too early to judge Obama from a policy implementation perspective but he’s clearly restored the American brand raised our standing in the eyes of the peers. And, also, let’s not forget that the Iranian cries for freedom spring from a candidate also seeking change and a populous clearly inspired by the amazing barrier-breaking experience that was the Obama election.

    Also remarkably, the Republicans’ political gamble of “no” instead of “yes, but” hurt the country by leaving Obama’s stimulus bill in the exclusive hands of Pelosi, et als, and to the extent it’s loaded with pork, what would one expect from a bill driven entirely from one political electorate. More tax cuts and other compromises would have led it to be more effective generally. Yet, again, it is hard to argue objectively and cogently that the economy is not in a turnaround phase. In several months, about the time most Americans drop what they’re doing to take a look at what’s going on around them, during the holiday season, things will likely look swell and the country will be prepared to soak-up a beaming state of the union address, circa 2010.

  13. martin Says:

    I am always willing to p11ut my money where my mouth is. Since we will all be on this blog two years from now, let’s concoct some bets. For me the key thing is always to be able to say “I told you so.” As an unreconstructed Marxian analyst I think my analysis provides a view into the future. So, I predict;

    1. unemployment next year at this time will be over 11.5% and GNP will have dropped 10% from its peak.

    2. The death toll in Afghanistan will be greater on a y-to-y basis than it is this year.

    3. Obama’s popularity will have dropped by 20% y-to-y.

    3a. He will be a one term president.

    4. There will be a populist attack on a major investment bank that will be virulent and affect its ability to do business.

    Explicit predictions!

  14. Buzzcut Says:

    Wow! Who knew that unrecontructed Marxists could be as negative as Sean Hannity!

    Martin, you would be very popular at one of those tea parties. Just don’t mention the Marxism. ;)

    Well, I like 3a at least. ;)

    1 would not surprise me, and with the Marines now on the offensive in Afghanistan, 2 is extremely likely.

    We can only wish that 4 occurs!

  15. Michael Wells Says:

    A couple of the things that I like about this blog are its wide ranging topics and differing viewpoints. Martin’s willingness and ability to ask the hard questions. Buzzcut’s conservative feistyness and veering the discussions in new directions. Wendy’s broad insights and Canadian viewpoint. Sorry to leave anyone out.

    Martin, the Marxist analysis may be why we disagree even though we agree. Back before I ever registered as a Democrat I thought of myself as a “small d” democrat anarchist-pacifist. Had lots of friends who were Marxists and had the same experience of agreeing on principles but not details.

    If this isn’t forbidden in the blog, I’m in for $100. Are you giving odds? What decides the outcome, all have to occur, 3 of 5? I hope you’ll keep track, I’ll certainly forget in two years.

  16. Martin Says:

    $100 too much. My style is $1. To make this more difficult for me this is a one year prediction.

    1. Unemployment will be above 11.5%. It is 9.5% now.

    2. GDP 10% drop from peak. This one will be tough but I stick with it.

    3. Afghanistan more casualties for all allied forces than this year at this time. Shall we say from July 1 this year through June 30, 2010 versus the previous year. Last year the count was 327.

    4. Let’s make it a round number Obama’s popularity at 40% or below on June 30 2010.

    5. A Congressional populist attack (political no violent) on Goldman Sachs or a bill controlling Fed by June 30 next year.

    I am taking a lot of risk here on being proven wrong. 2 1/2 out of 5 is a draw.

  17. Michael Wells Says:

    You drive a hard bargain, OK $1.

    I hope I win, these are all depressing — except the attack on Goldman, they’re looking more like profiteers all the time.

  18. Hayden fisher Says:

    Tomorrow is a new day but today the patient regurgitated on you, doctor; maybe discharge is indicated.

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