The evidence just keeps mounting that Team Obama sees its flagging poll ratings and increasing criticism of key incumbents as a mere communications/imaging problem. Its response is just to slap more lipstick on those pigs.
Let’s look at a couple of particularly obvious plants. One is from the Washington Post by Dana Milbank, “Why Obama needs Rahm at the top.” The title is a tacit admission that the calls for Rahm’s ouster have gotten noisy enough that merely ignoring them will no longer do. But this piece is such a vomititious piece of fawning spin-transmission that I can’t imagine anyone taking it seriously. I pinged a Capitol Hill insider for his reaction and got this:
My guess is that this is Rahm’s exit memo. Rahm’s method is self-promotion through people like Dana Milbank. He’s like an executive going down with the ship using the press to shift the blame to everyone but himself.
A more adept but ultimately no more persuasive piece runs at the Wall Street Journal. The headline alone is a sorta win for Team Obama: “Bailout Anger Undermines Geithner”. Yes, they have to admit the Treasury secretary is bloodied (it would be hard not to notice how Paul Volcker has suddenly become he face guy for the Administration’s financial reform program) but it’s due to anger, which is code for lunacy. Sane people are of course ever and always level headed. No reason to be angry just because banksters enriched themselves on a scale heretofore unheard of, and as a result wrecked the housing market, the commercial real estate market, most people’s retirement accounts, and on top of that, looted taxpayers and are merrily off repeating the very same behavior that created The Near Destruction of the World Economy, 2007-2008 Edition.
No, the failure to have investigations, prosecutions, and a serious restructuring of the financial system is the lunacy in this picture. But Team Obama is hopelessly in bed with the financial services industry; they were the industry that made the biggest campaign donations (and Rahm himself had cultivated hedge fund and private equity managers). So the Journal blandly runs the Administration party line as conventional wisdom:
His dilemma: The bank rescues he helped engineer averted economic collapse. Yet to some lawmakers, Mr. Geithner looks weak. His association with unpopular financial bailouts has become an albatross. His neutral rhetoric on bankers’ bonuses—the fat payouts are “very hard for people to understand,” he recently told CNBC—spurs talk that he coddles Wall Street.
Yves here. This is complete and utter bunk. “The bank rescues…averted economic collapse”? No, there was a vocal contingent arguing early this year that putting the banks in receivership, which happens to be the very policy the Administration is advocating now, with its “living wills” program, would be the best course of action. By happenstance, Ed Harrison provided a reminder in a post earlier tonight. An IMF study of 124 banking crises concluded that winding down impaired banks, although more painful in the short term, was less costly, both to taxpayers and in terms of economic growth.
So a lack of political will, the failure to take over the sick big banks, just as the FDIC does with the small fry, is falsely portrayed as sound policy. And Geithner does not just look weak, he IS weak. Has he ever stood up to the industry? Opposing a bailout of Lehman does not count, that was the course of least resistance in the backlash after the subsidized acquisition of Bear by JP Morgan. Similarly, his bonus talk is loud and clear: he BELIEVES in those big bonuses, he just lacks the guts to say so. He knows he has to cover for how badly he is captured by the industry.
We also have other annoying misrepresentation later in the article:
Mr. Geithner’s approach to stabilizing the financial system, particularly the “stress tests” to measure bank health, helped put a floor underneath the crisis, something even critics concede.
Yves here. Sorry, this is simply counterfactual. Many of the critics of his plan have not changed their dim view of the stress tests (and let us not forget that the PPIP, another element of the Geithner plan, has been a bit of an embarrassment). Let’s hear from Simon Johnson:
The Obama administration, after some initial hesitation, used “stress tests” to signal unconditional support for the largest financial institutions…
The downside scenario in the stress tests was overly optimistic, with regard to credit losses in real estate (residential and commercial), credit cards, auto loans, and in terms of the assumed time path for unemployment. As a result, our largest banks remain undercapitalized, given the likely trajectory of the US and global economy. This is a serious impediment to a sustained rebound in the real economy – already reflected in continued tight credit for small- and medium-sized business.
Even more problematic is the underlying incentive to take excessive risk in the financial sector. With downside limited by generous government guarantees of various kinds, the head of financial stability at the Bank of England bluntly characterizes our repeated boom-bailout-bust cycle as a “doom loop.”
The article has more seeming objective but actually slanted accounts, giving the logic of various Geithner positions, and the resistance they encountered, all told to create the impression that opponents are either rubes, unreasonable, or driven by the need to appease that lunatic, um, angry public.
But it was pretty obvious that something was up last week when I got this Treasury press release: “Treasury Secretary Tim Geithner Remarks on the Healthy Food Financing Initiative“. And indeed, the Journal reveals this uncharacteristic move is part of a charm offensive (the Journal has a picture of Geithner “touring” a grocery store. “Touring”? Are normal domestic errands that alien to our Treasury Secretary? The stunt smacks more than a bit of desperation.
Of course, we get the usual denials:
In interviews, top White House officials—including Rahm Emanuel, the president’s chief of staff, and senior political adviser David Axelrod—said Mr. Geithner’s job is secure. “The president’s view is that Tim is one of the stars,” Mr. Emanuel said. “Tim was an essential and a key player in developing a strategy that helped restore confidence and turn the whole country around.”
Yves here. So far, Geithner’s job looks safe. It’s when the President has to start defending him that we will know that the end is nigh.