A Response to My Mom on Obama and the Economy

(Note: she's 89 and something of a radical)

Hi Mom,

This is in response to your recent rant about the economy and Obama. Note Obama's remark to the bankers on April 3rd (as reported in Salon):

Friday, April 3, 2009 15:30 EDT
Quote of the day

President Obama, during his recent meeting with bank CEOs, as quoted by Politico:

"Be careful how you make those statements, gentlemen. The public isn't buying that.

My administration is the only thing between you and the pitchforks."

That's true, at least to an extent. And it shows something I've written about before, which is the advantage that the kind of populist outrage that's been directed at AIG can have for the Obama administration. There are, obviously, some pitfalls there, but at the same time, if done the right way, the administration can use the threat of those pitchforks to keep the banks in line and at least somewhat compliant.
-- Alex Koppelman

Not that I don't agree with you somewhat, but Obama's strategy is surely impelled by his perceptions of the politically necessary. Let's not forget that banks, hedge funds, insurance cos. etc. are the repositories of a lot of pension funds, 401Ks, etc. My TIAA and Fidelity retirement funds for example. And millions of workers (the ones whose pensions haven't already been ripped off, that is).

Remember too that if these guys go down (eg Citi, Rubin, Summers...) they'll take the economy down with them. We are in some sense hostages. Not only we in the US or we in the West, but also China, India, etc. The "bankrupting" that would ensue would put the 1930s depression in a favorable light. It wouldn't be literal bankrupting (hence the quotes) because no court on earth is big enough to work out those balance sheets. To consider just one case: If nuclear India is returned to impoverishment, from which it has only recently begun seriously to extract itself, what might be the political consequences of that?

In short the practical consequences of intervention can be huge, and it is vital to proceed carefully, and so to speak to employ "minders" from the old exploitative regime. Like a good parent, Obama must assure these clients that while he will discipline them, he still loves them. Then too, much of finance capital (the "enlightened" wing, the relative sane wing), were integrally involved with his campaign: major donors and advisors.

I'm quite grateful to have a dude like this running the show. Although I often don't agree with him I admire him and trust him more than I have any other president in my lifetime. The greatest was Lincoln; the next best was Roosevelt. I think Obama has the potential to be a president on their level.


Mom's Original message:

> I hope you watched Bill Moyer's journal tonight. Not only the discussion with William Black which gave us a harrowing picture of what is
> going on in the current administration, ( not much better than under Bush supporting the establishment to the detriment of
> openess) and the interviews with Glenn Greenwald (Salon) and Amy Goodman, both honored with the Izzy prize. How can we
> get the real information to Obama who just gets briefings. And why did he appoint such establishment figures. Sumner never
> was right, Bernanke is not better than Greenspan etc etc. The banking situation is a total disaster. I am sorry to miss Stewart
> and Colbert most of the time, I get too tired and fall asleep watching them. What I heard today reinforced my views that
> Obama needs better information and advisors. Just felt like letting off steam.
> Lots of love from Oma