Clinton Outdoes Tsipras in Kolotoumbas with Her Reversals on TPP, Bank Regulations

In the last two days, we’ve seen the faltering Democratic party front runner decide that it might behoove her to distance herself from the Trans-Pacific Partnership, the centerpiece of her “pivot to Asia” strategy, and America’s most hated oligarchs, big banksters. Might the timing of this sudden change of heart have a wee bit to do with the Presidential debates next week, and it not being all that easy to defend the pet causes of the privileged classes in crowd-pleasing soundbites when challenged by Sanders?

As least Greek prime minister Alex Tsipras, who engaged in similar reversals, can at least be credited with fighting hard for what he’d promised Greeks, even if those promises were contradictory, and then retreating only in the face of overwhelming force, namely, having the ECB put a choke hold on the Greek banking system.

By contrast, Hillary’s sudden shift is simply a not-terribly-well-executed attempt to reposition herself. As Jeb Lund described her increasingly obvious problem in Rolling Stone:

In the last day, Hillary Clinton announced her opposition to the Trans-Pacific Partnership, a deal that she will likely claim she only championed as part of her duties as secretary of state and that, in reality, she just as likely helped to create. She probably opposes it as strongly as she did NAFTA, which her husband created, and which she and Barack Obama campaigned against in 2008 and then proceeded to do nothing about. This is a habit. She probably is doing this because, in spite of a career in which neoliberalism got her this far, Bernie Sanders is starting to eat her lunch among labor voters, progressives and anyone who is not a big-money donor. You know, the people who vastly outnumber the latter and do things en masse, like vote.

On the TPP, Clinton’s shift in position, while not exactly credible, also amounts to less than she’d like the great unwashed bottom 90% to believe. As Lambert and others have pointed out, the press did her a huge favor via headlines that considerably overstated her distaste for the “trade” agreement. It falls short of opposition; it’s of the form, “Based on what I know now, I don’t like it.” That gives her plenty of leeway to claim she’s gotten more comfortable as she has learned more or contend that she’s won concession (say improved side deals) that allow her to support the pact.

But even if Clinton actually does oppose the deal, the cost to her in donor funds is not likely to be high, so she might stick with this position to bolster her progressive bona fides. Beltway insiders tell me that despite all the weight Obama threw behind getting an agreement done, corporate support was narrow. The TPP’s and its ugly sister, the TTIP’s seemingly natural base, multinationals, were not pushing for it because trade is already substantially liberalized. They didn’t esee much to be gained.

And of the industries that were keen about the deal, such as Hollywood, tech, Big Pharma and Big Ag, enthusiasm has also cooled due to the concessions made in the Atlanta round, particularly on the agriculture and drug fronts. Plus with the House leadership now in disarray, the Republican rebels who oppose to the deal are ascendant. So Clinton is not spending anywhere near as much in the way of big donor chips as one might think if she continues to express antipathy for the TPP.

On the banking front, even though Clinton has just served up a not-too-bad menu of bank reforms, it’s inconceivable to see her as doing more than head-fakery. The Clintons have ridden to success on the back of the fundraising of the powerful Robert Rubin faction in the Democratic party. And Obama, who has been similarly dependent on Big Finance as donors, has also made crowd-pleasing gestures to go after the banksters and never followed through in any serious way. Remember how the Administration kept talking up its plans to close the carried interest loophole in 2011 and 2013? Yet Obama held big fundraisers in New York City and the homes of private equity barons whose lucre had come from that ruse. It’s hardly surprising that Obama was somehow never able to secure anything more than optical tax increases on the rich.

Similarly, even though Obama did pass Dodd Frank, it was weak tea to begin with and designed to be watered down, with numerous reforms kicked down the road to be finalized after various studies were completed. That gave lobbyists a second go at getting their language in the final rules, out of the sight of the press, and well after the public fury over the bailouts had cooled to sullen resignation. It’s hard to think that lesson was lost on Hillary.

Now if you were naive enough to believe that Clinton had had a Damascene conversion and really wanted to rein in the big banks, her plan does have some promising elements. But even so, remember what her stated objectives are: to prevent future crises. Yet surprisingly large cohort of economists, including the IMF, are calling for more radical action. They’ve has come to the conclusion that the financial services industry is outsized and has become a drag on growth.

Reuters gives a good overview of the Clinton plan:

Clinton would charge a yearly “risk fee” on a sliding scale on the liabilities of banks with more than $50 billion in assets along with other institutions overseen by financial regulators…

“These sound like much more meaningful reforms than some of the things she has suggested earlier,” said former Federal Deposit Insurance Corp Chair Sheila Bair, currently president of Washington College, in Chestertown, Maryland.

Clinton’s HFT tax would target securities transactions with excessive levels of order cancellations, which her campaign said unnecessarily burdens markets and enables unfair and abusive trading strategies…

Clinton would also pursue additional oversight of the “shadow-banking” sector by imposing other margin and collateral requirements on risky short-term borrowing; review recent regulatory changes to the money market fund industry for possible holes; create new reporting requirements for hedge funds and private equity firms; and strengthen the authority of the Financial Stability Oversight Council.

The HFT changes seem well thought out and no doubt reflect the input of former CFTC chairman Gary Gensler, who is one of her key advisors. But some of her other ideas, like “give the regulators more authority to force the breakup of big dangerous banks” are pie in the sky.

Even if she were to get a provision like that passed, the opposition to forcing an institution that was anything but on the verge of failure would be overwhelming. The ideology in America is to leave businesses to run themselves, which includes running themselves into the ground, even when those businesses are banks that are so heavily subsidized as to not be properly regarded as private enterprises. Just read Sheila Bair’s memoir, Bull by the Horns, in which she described how she was completely stymied in her efforts to get information about the condition of the non-FDIC regulated parts of Citigroup, in an successful effort to block her from putting it in resolution in 2008 and forcing out its clearly inadequate CEO, Vikram Pandit (as in she would be depicted as shooting from the hip, over the opposition of regulators who had better information. Let us not forget that those regulators, above all Treasury Secretary Timothy Geithner, had very close ties to Citigroup vice chairman Bob Rubin). Despite the pitched battle against her, she did succeed over time in getting Citi to downsize considerably.

It is important to see Clinton push for much stronger efforts to cut the shadow banking system down to size. The role should not be to prevent it, which is unrealistic, but to keep it from becoming so large or sufficiently connected to the big banks and major capital markets players that it poses a threat to the financial system. But I’m not sure that going after the repo system is sufficient. One of the big vectors remains over the counter derivatives. Admittedly, many of those risks arise precisely due to the fact that those positions are typically funded in short-term markets. But I’d like to see more of a belt-and-supsenders approach, since the lucrative OTC derivatives are not socially valuable and are in many cases detrimental (as in their are used for accounting, regulatory, and tax gaming).

The New York Times’ Neil Irwin similarly sees Clinton’s reform plans as limited in ambition:

Directionally, Mrs. Clinton favors more intensive regulation of Wall Street than what is in place now. Bank executives and lobbyists will find little to like in her plan. But her approach stops short of the wholesale breakup of too-big-to-fail banks favored by Mr. Sanders and Mrs. Warren. She would prefer instead to take the philosophical approach embodied in the 2010 Dodd-Frank financial reform act a few steps further.

And this part illustrates the limits of her approach:

Mrs. Clinton calls for new international rules governing disclosure, margin and collateral requirements to try to make a failure of one global bank or insurer less likely to endanger the entire world economy. These are changes that are likely to take place through regulatory action rather than legislation.

“International rules” take an eternity to get done, even when the key actors can reach agreement. I’d like to see a more bloody-minded approach, given that the US can deny access to dollar based payment and clearing systems to people who don’t want to play by our rules.

The big problem with Hillary is it is hard to believe she stands for anything other than her desire to exercise power. How can you square her position on the issue she appears to care most about, women’s rights, with her warmongering? Economic progress is almost always a necessary but not sufficient condition for women to get more education, more access to jobs, and most important, more reproductive control. Men who feel their social and economic status is precarious are not going to accept increased competition from women in society and in the workplace. Wars devastate economies, lead to flight of the upper classes and educated professionals, and often produce a rise in rape and other types of violence against women. Yet she seems utterly blind to the hypocrisy of her claims of trying to advance the position of women abroad while being a rabid hawk.

Despite his famed kolotoumbas (somersaults) and the disaster his leadership has represented for Greece, by delivering Greece’s creditors a more complete victory than they could ever have engineered on their own, Tsipras still remains in power. Why? First, even with his horrific errors of judgment, he is still seen as well intentioned. Second, Greece is fabulously corrupt. While Syriza is not clean, Tsipras and Syriza are not (much) in the pocket of the oligarchs, and thus are less tainted than the establishment parties. Third, by al accounts, Tsipras is a charismatic and inspired speaker.

None of the factors that inclined Greek voters to forgive Tsipras for his flip-flops are operative with Clinton. Voters doubt Clinton’s character the more they see of her, as her rising disapproval ratings show. The Clintons can never hope to distance themselves from their lust for money and connections to the rich and powerful. And Hillary has all the pizzaz of a corporate attorney.

Tsipras’ leadership has been a tragedy for Greece, and his becoming a Vichy Left prime minister is also personal tragedy, since history is not likely to judge him kindly. Even the word “kolotoumba” so often applied to his reversals, has the connotation of “falling on your ass.”

By contrast, it’s hard to see Hillary as anything other than a farce. American voters are figuring that out and it’s unlikely her feints this week will do much to change that.

Print Friendly
Tweet about this on TwitterDigg thisShare on Reddit8Share on StumbleUpon0Share on Facebook0Share on LinkedIn0Share on Google+3Buffer this pageEmail this to someone

37 comments

  1. Ditto

    It comes down to trusting that she means what she says .

    Fool me once, shame on you.

    Fool me 20 years, I must be the dictionary definition of an idiot.

    If the Democratic base wants to believe her, it will say a lot about the base. Unlike President Obama, they can’t pretend not to know who she is.

  2. Brooklin Bridge

    The big problem with Hillary is it is hard to believe she stands for anything other than her desire to exercise power.

    It would be difficult to come up with a more concise and accurate summary of Hillary Clinton. And the concluding assumption in the post that this fact is, or should be, fairly obvious to all would be hard to argue. As such, this election will be telling about the state of our union and the people in it and the ease or difficulty of manipulating both beyond a certain point. Just how far down the rabbit hole are we?

    1. DJG

      Indeed, Brooklin Bridge. The whole paragraph is a summation of why she is not qualified to be president and an indictment of our elites and their endless wars:

      “The big problem with Hillary is it is hard to believe she stands for anything other than her desire to exercise power. How can you square her position on the issue she appears to care most about, women’s rights, with her warmongering? Economic progress is almost always a necessary but not sufficient condition for women to get more education, more access to jobs, and most important, more reproductive control. Men who feel their social and economic status is precarious are not going to accept increased competition from women in society and in the workplace. Wars devastate economies, lead to flight of the upper classes and educated professionals, and often produce a rise in rape and other types of violence against women. Yet she seems utterly blind to the hypocrisy of her claims of trying to advance the position of women abroad while being a rabid hawk.”

      Yet here I am in Chicago, near the bottom of the large rabbit hole, among an electorate that votes regularly for people who publicly steal from the public’s own funds.

  3. L’Enfant de la Haute Mer

    That’s wright:
    Clinton Outdoes Tsipras in Kolotoumbas!!!
    Nothing better than this!!!

  4. rusti

    Voters doubt Clinton’s character the more they see of her, as her rising disapproval ratings show.

    Maybe I don’t have a highly-diversified list of RSS feeds, but I really can’t recall stumbling across any web site with a large contingent of followers who actually defend Hillary. Do they exist? Living outside the US and having only this virtual connection to American politics it seems like the only two candidates with any support are Trump and Sanders.

    1. oho

      ***large contingent of followers who actually defend Hillary. Do they exist?***

      Left-of-center women over 55 (who tend to have an underrepresented presence on the intertubes)—and even they gradually are leaning to Sanders

      The purported left-of-center blogosphere/media who try to ingrain themselves with Camp Hillary so that they can quote a “senior administration official” starting in Jan. 2017.

      Ironically, it may be a Democrat (HR Clinton) who proves that money is necessary but not sufficient to win elections.

      1. NotTimothyGeithner

        My mom’s twin sisters (Hillary contemporaries) expressed skepticism about Hillary’s age and it wasn’t a shot at my mother’s age which might be expected from her brothers. They expressed skepticism about Clinton’s dubious career too.

        I was shocked. Those two just aren’t the kind who go against leadership.

    2. RUKidding

      You raise a good question about HRC’s “followers.” I live in the USA, and I’m not even sure about her popularity or what have you. For a while, it appeared as if HRC was “inevitable.” Up to about a year or so ago, if I told ANY of my traditional D-voter friends that I would never ever ever vote for HRC for anything, I heard gasps of horror followed by: but but bu Clinton! ladyparts! etc.

      Nowadays, not so much. HRC has a huge war chest from her Wall St/banker/hedge fund and probably MIC backers. So time will tell how much she can woo the voters, as I’m sure she’ll try. And she has tons of money to GOTV and do tons of advertising.

      We’re really faced with a huge group of losers this election – on both sides of the aisle. Sanders is clearly the pick of the litter, but, eh?, that’s not saying much.

      I’m glad HRC’s massive flip-flop on TPP is getting some air time. Citizens deserve to know. HRC’s a power-mad, money-hungry politician who’ll say or do anything to get elected. I hope the stars in many citizens’ eyes over the Clinton “brand” will fade and fade quickly.

      1. NotTimothyGeithner

        Hillary probably flipped because she saw TPP dying with the various elections approaching and GOP chaos.

        Just because she saw it that way doesn’t mean her corporate backers do, and with them so goes the media.

  5. BDBlue

    I honestly don’t care what Hillary or any other candidate truly believes. I only care whether they will do what I want them to do – whether because they believe it or because political pressure has forced them to do it. I can think of a lot of true believers who, in the end, did things I hated because of political pressure the other way, so I think trying to look into these people’s hearts, assuming any of them have hearts, and divine what they really think is, in some ways, a waste of time. I also think if the pressure is right, having people that only aspire to power is not necessarily a bad thing – it means if they think it will get them and keep them power, they will [insert here – oppose TPP, support TPP, oppose Wall Street, bail out Wall Street, stop wars, start wars, etc], And I’m sorry is there anyone who runs for President of the United States (or Senator or Rep o) that doesn’t “just” aspire to power at some level? I’m not sure I believe that, not the way our current system works.

    None of which, of course, is an endorsement of Hillary or anyone else. And, what I appreciate about this post is the part that looks on the real pressures – from Wall Street, for example – that will almost certainly keep her tacking on a certain path. My only objection is to the idea that what these people really believe matters because who the hell know what these people really believe? I’m not sure even they know it sometimes. And so I really only care about what they say they are going to do and the pressure that exists to make sure that they do it.

  6. Stephen Rhodes

    Just a quibble about the phrase on Obama, “to secure anything more than optical tax increases on the rich”. Doubtlessly some of the rabid objection to Obamacare is rooted in that genuine capital gains tax increase on “top people” funding Obamacare. (Admittedly all before 2011)

    And thanks again.

    1. Yves Smith Post author

      I’ve seen the modeling on the total impact on the targeted cohort, and it’s a lot less than the noisemaking would indicate. The wealthy still routinely pay less in effective taxes than middle and upper income earners due to the preferential treatment of capital gains and their ability to time recognition of income.

      The details on your point from Snopes:

      It’s important to note that the increase in marginal tax rates for federal income tax, capital gains, and dividends affected only those persons with taxable incomes over a $400,000 (single)/$450,000 (married) threshold.

      The threshold for the top 1% in 2011 was $368,000, and for the top 0.5% was $550,000. I can’t find out quickly whether this is for households or individuals, but you have to assume the overwhelming majority of people at that level file as households.

      And the point I made re the carried interest loophole stands. It’s a monster tax break for hedgies and PE fund managers.

      1. John Zelnicker

        If your thresholds come from the IRS, and it looks like they do, they are based on the Adjusted Gross Income (AGI) on federal income tax returns. Of course, it could be a single person household, but as you assume, it is indeed households.

      2. Stephen Rhodes

        As you wrote, Yves,

        The wealthy still routinely pay less in effective taxes than middle and upper income earners due to the preferential treatment of capital gains and their ability to time recognition of income.

        And you are preaching to the choir (why I said I was quibbling).

        Finally (for the moment) as Mitt Romney said ~”$300K is not very much money”–for a guy’s annual speaking fees and bringing in somewhere above $2M/month on income from capital.
        Not very much money for income from “labor”. His tax rate for the period in question, as everybody recalls, was about 14%.

        1. Stephen Rhodes

          Here’s the relevant bit of Schwab’s capsule for 2015:

          Also, an additional 3.8% surtax applies to net investment income for taxpayers with AGI over $200,000 (single filers) or $250,000 (married filing jointly).

          Long-term capital gains and qualified dividends
          A top rate of 15% applies to qualified dividends and the sale of most appreciated assets held over one year (28% for collectibles and 25% for depreciation recapture) for single filers with taxable income up to $413,200 ($464,850 for married filing jointly). Long-term capital gains or qualified dividend income over that threshold are now taxed at a rate of 20%.

          So the total rate for “top people” on long term cap gains is 23.8%=20%+Medicare’s 3.8%, or so it seems.

  7. hemeantwell

    HRC is a neoliberal pol, a parasite on parasites. But I am heartened at what must be good timing as far as the prospects of stymying TPP here. I’m also wondering about spread effects to Canada, where the opposition to Harper has reportedly been doing better, with anti-TPP sentiment playing a major role.

  8. Chibboleth

    As much as this article is on the nose regarding Hillary, I think it also misses the point a bit. Everybody knows who Hillary is and what she represents, to the point where I’m not really sure why she’s even bothering to pretend otherwise. Her support isn’t based on any kind of faith in Hillary Clinton – as far as I can tell very few people actually want her to be president – it’s based on the Republican field being terrifyingly insane. It actually makes complete sense the way she’s been avoiding public appearances since Trump, Carson et al are effectively running her campaign for her.

    As long as she was presumed the prohibitive front-runner, and later as long as the media was determined to totally ignore Sanders, she could easily just sit back and let Donald Trump scare the shit out of 70% of the country and then coast to victory on that. The irony is that Sanders is doing well enough now to demonstrate that Liz Warren would have won this thing in a walk had she decided to run back when people were trying to draft her.

    1. sd

      Well, there you have it. American politics boils down to choosing which one of the candidates doesn’t scare the shit out of you.

  9. Susan the other

    Very perceptive analysis of Hillary; if anything a bit too kind. I don’t think she can win any state in this race. But it will be interesting to see if big money actually can create enthusiasm for her. If so we could dig up some revered dead leaders and run them.

  10. David

    Is Bernie different?

    I’m having difficulty “squaring” Bernie’s position in the issue he appears to care most about, inequality, with his apparent support for the current warmongering.

    1. sd

      Is that what his voting record actually says? I am only aware of one vote for war, the AUMF after 9-11.

  11. Gil Gamseh

    “The big problem with Hillary is it is hard to believe she stands for anything other than her desire to exercise power. ” Nice summation, counselor.

    Every big-stage politician has such a desire. The effective ones conceal it sufficiently to assuage their future subjects, cannon fodder, and extractivees. Mrs. Clinton cannot pull this sleight-of-hand off. She is toast.

    Good luck, President Biden.

  12. peter

    “Clinton’s HFT tax would target securities transactions with excessive levels of order cancellations, which her campaign said unnecessarily burdens markets and enables unfair and abusive trading strategies…”

    Isn’t it against security laws to submit any order when you do not have the intent to fill that order? Perhaps we should just enforce some rules we already have. Why should we accept breaking the rules just under “excessive levels” anyway?

    1. Yves Smith Post author

      It’s costly to prove intent, although you can argue that the frequency of cancellations establishes that.

      The SEC could easily get rid of HFT by getting rid of co-located servers, which it has allowed under Rule NMS. But HFT is also spreading to markets not regulated by the SEC, like FX, so I can see the point of a broader approach.

  13. participant-observer-observed

    I find it kind of sad, actually, in a pathetic kind of way. It is much easier to be angry at Obama for giving away the Bush tax cuts after so passionately persuading voters he would serve them and their interests faithfully. Who could have guessed he was speaking then to the Republican voters?!

    But at least Obama has the excuse of being a young novice, so it is no surprise to have watched the “tail wag the dog” all these years.

    In the case of the Clintons, they have enriched themselves beyond belief through so-called “public service” and created the very political party and its values and general political climate in Washington and the country over through so many decades, with the resulting nausea and cynicism of voters.

    At least Sen. Sanders has his decades of track record lending him authenticity, regardless of how powerlessly people realistically expect him to accomplish anything if he were to get into office, or to truly get the usa out of the war economy and the curse of its Saudi misogynist and Israeli belligerent master bed-fellows.

  14. flora

    Hillary has just undercut her supposed strength: that she’s tough, strong, powerful. Her mewling TPP statements are such obvious pandering in a “they made me say this and Trump said it first” kind of way. Strength, character, backbone, steady hand….. not so much.

  15. trish

    “young novice?” maybe a novice slick and savvy oportunist when he started his climb up through our system. Always skilled at what to say to whom to get what & where he wanted and for whom (generally not the public). The hopeful voters – myself included- were the novices back in 2008. I hope more savvy now.

  16. ewmayer

    I suggest mentally replacing all occurrences of “Clinton would”, “Clinton favors” and similar phrasing in the above article excerpts by appending “says she” to “Clinton”. Obama similarly “said he would” do a lot of stuff that never happened, or that magically morphed into the diametric opposite deeds, relative to the earlier words.

  17. Saltaire

    Glad to see so many have Hillary’s ego trip number, doesn’t she just love the applause. Elizabeth Warren has been the only clear, savvy, voice to understand and penetrate the smoke and mirrors of Wall St hooligans. However, it has worked out OK as her skills would be wasted as president. I am hopeful Sanders or Biden can utilize her talents to be the head cop to clean up our banks.

    1. NotTimothyGeithner

      Biden? Wow, you might want to read up on the guy. In short, Biden makes Hillary look like Trotsky.

      1. John Hemington

        You are of course referring to the “Senator from VISA”, the man who never met a big bank he didn’t like.

  18. Laura

    There is historical pceredent: I like Ike you could chalk it up to being famous for something else before running for office (winning WWII, putting up with bill clinton). Still, I can’t help but think that sexism has something to do with it.

Comments are closed.