Posts Tagged ‘President Obama’

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

Pollyanna Has All the Friends…

Monday, July 13th, 2009

…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?

Martin Kenney
by Martin Kenney
Mon Jun 1st 2009 at 9:40am UTC

Wasting Creative Talent

Monday, June 1st, 2009

Yesterday, The New York Times had one of the most frightening articles I have ever read.

In what I think is one of the most perverse misuses of our creative talent that I have ever heard, President Obama is launching a massive Reagan-like Cybersecurity Cold War that has the military-industrial complex salivating. This is expected to soak up the trained computer scientists from Silicon Valley and put them into super-secret R&D.

Instead of creating value for the global economy, they will now be sequestered in high-security laboratories where the knowledge they create will only slowly, if ever, leak out to the commercial world. Mind you, this initiative is being pushed while Harvard and many other universities are considering firing tenured faculty. If a massive military cybersecurity program is the change that the current administration believes is going to assist the U.S. economy in overcoming the worst crisis of the last 75 years, then the future for us and our creative class is likely to be grim indeed.

It is my belief that openness, information exchange, and creating value for the consumer has been the hallmark of U.S. success and what made us a beacon for brilliant people from around the world. By taking some of best and brightest and sequestering them in laboratories shrouded in secrecy, we are taking a deliberate step in the wrong direction.

Can a creative economy be built on directing resources in such directions?

Richard Florida
by Richard Florida
Fri May 15th 2009 at 7:00am UTC

The View from Canada

Friday, May 15th, 2009

The Globe and Mail reports (ht: Wendy Waters):

Mr. Obama now proposes to levy a $210-billion tax increase (over 10 years) on U.S. corporations that operate through foreign subsidiaries – making them, by and large, the (nominally) highest-taxed corporate entities in the world. This will be negative for the United States, potentially terrific for Canada.

Beginning soon, major U.S. corporations can be expected to move head offices to Toronto and Calgary to take advantage of the lowest corporate tax rates (by 2012) in the G7. In the end, Mr. Obama will have ensured neither revenue nor jobs.

Richard Florida
by Richard Florida
Sat Feb 28th 2009 at 10:20am UTC

The Worst Is Yet to Come

Saturday, February 28th, 2009

Like many people, I was uplifted by President Obama’s speech Tuesday night. But, today it’s back to the real world. I find myself in total agreement with this assessment from Seeking Alpha.

You have undoubtedly heard of the Case-Shiller Index. It is a commonly cited index for tracking housing prices. The December read is now out showing a YoY drop of 18.5%, worse than predicted. That is not what is scaring me … He has an index of American home prices going back to 1890. According to this index, the housing bubble we just experienced was by orders of magnitude worse than any other we have ever seen in this country. Moreover (you better be sitting) housing prices have a lot further to drop … He believes we are only halfway back to fair value and usually during a correction we overshoot fair value. You add into this equation the effects of a global downturn, job losses, reduced wages and the like and one can easily imagine us overshooting the trend line significantly.

I firmly believe we will not find a bottom on the economy until we find a bottom on housing. From this data, that bottom is still a long way off, as in 3-5+ years off, and it is a lot lower than most have predicted. That is far worse than this doom-and-gloomer was thinking.

So that puts recovery out to say 2012 or 2014. From where I sit, that may even be too optimistic. Both the Long Depression and the Great Depression lasted some two decades before real recovery came about. I could be in my 70s before this thing turns around. And unless he has four terms or so, Obama will not preside over recovery. My heart may feel differently, but my head tells me there is a long, long road ahead of us.

Richard Florida
by Richard Florida
Wed Feb 25th 2009 at 9:16am UTC

Continental Divide

Wednesday, February 25th, 2009

With President Obama visiting Canada last week, Nancy Folbre discusses how the economic crisis is being felt in the two countries over at the NY Times Economix (h/t: Scott Pennington):

O Canada. That big, beautiful country to the north is a lot like us, just colder and a few degrees less … neoliberal. Canada has moved more slowly than the United States to deregulate its economy and shrink its social safety net. The resulting differences in the impact of global recession are small, but instructive.

As Fareed Zakaria points out in a recent Newsweek article, Canada is weathering the financial crisis better than we are. Canadian banks are more old-fashioned (that is, centrally regulated) than our own. Stricter leverage requirements have been enforced. Subprime mortgages have not been encouraged. Prohibitions against foreign bank takeovers have protected Canadian institutions from competition from the United States, but also buffered them against financial contagion.

Mr. Zakaria overstates the case when he claims that no government bailout has taken place there. The Canadian government has provided substantial assistance to the financial sector. But its efforts to increase available credit remain far less costly than our trillion-dollar subsidies. A more serious concern for Canadians is the likelihood that the sinking American and global\economy will pull them down.

As someone who spends a great deal of time between the two countries, they certainly feel like a world of difference to me. Yes, recession has hit parts of Canada, but Canadians show far, far less anxiety than their American counterparts. Life goes on more or less as usual. Canada’s social safety net surely plays a role as does its higher level of social cohesion.

But there is another difference that really matters. Canada’s credit and financial markets continue to function. That means people can get a mortgage or a home equity loan, or finance or lease a car. So the housing market still works, people buy and sell their homes, and undertake renovation projects. Plus they can sell their house and move to another place for economic or other reasons if they so desire. This means that the Canadian economy, while it has slowed down, can continue to function.

The frozen financial markets in the U.S. mean that its economy has, in effect, locked-up: homes can’t be sold; people can’t move. The vaunted mobility and flexibility of the U.S. economy has thus evaporated leaving it in a zombie-like state. This is what happens in a financial crisis and it’s why the U.S. is experiencing a very different kind of economic crisis today than with previous recessions and why it is ultimately in worse shape then Canada.

One last thing: The policy dialogue in Canada is less about bailing out the old and much, much more about investing for the long-run. Sure, there is a lot to complain about with Canadian politics and policy, but the overall dialogue is much more focused on the future and how to invest in a broadly functioning creative economy.

Martin Kenney
by Martin Kenney
Thu Feb 5th 2009 at 2:26pm UTC

Faith-Based Initiatives

Thursday, February 5th, 2009

Sometimes, reality is so deliciously humorous that there is little one can say beyond reporting and reflecting upon it. President Obama, after copying page after page out of the Bush Administration strategies on the current economic crisis, has decided to copy yet another! He wants to open, or is it reestablish, the Bush office of faith-based initiatives? The supposed improvement is that it will not show any favoritism.

Sending tax dollars to religious organizations is, in my mind, the wrong way to go as a society. On the other hand, if there was a requirement that each recipient of Federal largesse was required to pray for the success of the faith-based financial initiatives that Obama has proposed and, going a step further, pray that the souls of the banksters are (not) condemned to the fires of the Inferno, then maybe there will be some social benefit.

Do any of you have creative suggestions on what the New Office of Faith-based Initiatives could do?

Martin Kenney
by Martin Kenney
Sat Jan 31st 2009 at 10:39pm UTC

Focus on the Ball Not the Eyes

Saturday, January 31st, 2009

I was always a defender when I played soccer. The best advice I was ever given as a defender was to focus on the ball not the offensive player’s eyes, upper body, or feet. Your peripheral vision takes those things in. In Washington, D.C. parlance, Deep Throat always had it right – follow the money. Any time you hear a politician, remember to watch the ball and the ball is the money.

Ignore the Middle East, abortion, whatever your hot button issue. These, though vitally important, are peripheral. The overwhelming issue that will structure all of the rest of our decisions for the next decade or even half century, is the reorganization of the economy. It is in dire shape. The pie is imploding and powerful interests are motivated to protect their slice and the current arrangements. To do this in this environment, they must have access to the monies and regulatory powers of the state. Remember, when in a high stakes situation where everyone is rushing you to make the most serious decisions of your life (our lives) and you (we) cannot figure out who is going to be the victim, it is probably going to be you (us).

So don’t focus on Obama’s statements condemning Wall Street bonuses, telling you he cares about you, etc. These are part of the drama. Focus on real behavior. For example, his appointment of Geithner (was he giggling while being “grilled” by the Senators?), Summers, and the sub-secretaries – all deeply implicated in the current catastrophe – or the rush to get the second tranche of the earlier bailout (which has not had a positive effect and for which most of the money is unaccounted for or has been paid out in bonuses to those most directly responsible for the current situation). Neither of these and his other economy-related actions have been to benefit you.

But there is an even more significant “tell.” Do you wonder why Obama is letting the Republicans and Democrats do whatever they want with the stimulus package? The answer to me is quite obvious – he doesn’t care about it and what it does. Look through it – it is chump change for everyone. $1,000 tax break per couple, some money for states and cities, money for the road builders, some for solar energy, some for university students, but all of it chump change. The simple reason is that he doesn’t care about the stimulus because it doesn’t matter.

The big prize is what his funders in the financial sector want and that is the bad bank where they can pour the multi-trillions of dollars of bad loans onto the taxpayer without losing their jobs, their stockholders being wiped out, and some of them having to do the perp walk. It is the next banking bailout where the massive transfer from the taxpayers to the wealthy is going to occur. Watch the ball. Don’t listen to the words, believe the “shocked” indignation, or accept that Obama and the Congressional Democrats do not know what is going on.

Why is it important for us to be skeptical? We are going to have to rebuild this place, and there are only so many resources. If they are squandered today, they will not be available tomorrow. Rich has written in indignation about the spending on highways instead of mass transit and remarked upon how we have to put our cities together in new ways for a new set of people. This will not be possible if we are rushed into fundamental decisions about who will benefit in this crisis.

If you watch the ball, you are much less likely to be faked out.