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The Obama Game: Advice and Speculation

I must confess that there are certain types of human activity that are a complete mystery to me, and much of the column ink spilled this weekend serves as a vivid reminder.

There are two types of articles very much on display:

1. Who will key members of Obama’s cabinet be (with the financial press focused on the Treasury secretary possibilities)

2. What should Obama do? Tons, and I mean TONS, of advice pieces. The New York Times Sunday business section, for instance, has seven articles with advice on economic policy, and they don’t come close to converging.

This sort of speculation is impractical. We can natter all we want to about who Obama may pick, should pick, and what the implication of those choices might be. Guess what? He is gonna pick someone, and he isn’t listening to any us out here in the peanut gallery.

And even if we think we know how someone may operate (“oh, if he chooses Summers, than means X”), again guess what? The script may not play out as expected. Before Robert Rubin, no one though the Treasury secretary has much power, Rubin enlarged the role via making himself a combination of a negotiator and consigliere in Clinton’s cabinet, and moving fast in the Mexican currency crisis (which for him had the good fortune to happen early in his tenure), which gave him a lot of cred. The early Bush Treasury secretaries were unmemorable, and Paulson looked like an ineffectual bull in the china shop until September, when the combo of the Fannie/Freddie conservatorships and a $700 billion checkbook with virtually no strings attached suddenly gave him sweeping authority.

Similarly, look how Henry Kissinger, as national security advisor during Nixon’s first term, assumed more power than the Secretary of State William Rogers. It is possible, for instance, that Obama may have an unconventional economic policy decision-making structure, given the scale and complexity of the issues at hand, particularly with Paul Volcker having apparently become a trusted advisor.

And why do we feel the need to have people, yes, prominent and (hopefully) informed people offer up policy wish lists when Obama has a very large team that is no doubt already inundated with suggestions from their extensive network of contacts and experts? There might be ways of framing the possibilities that could be useful for the larger public (“If Obama hasn’t addressed X and Y by this date, Z will be the consequence”), but few are. And there are so many of this type of piece running now that they strike me as a lot of background noise (but it there are any that are really a cut above the rest, readers are welcome to point them out).

I can understand trying to guess what the Fed might do with interest rates, for instance. The Fed will do something (or not), it has only a limited range of choices, its action will have an impact on asset prices, so investors have reason to engage in that sort of guessing game. But the sort of speculation on display is so far removed from being able to help predict the outcome of any particular decision that I am at a loss to understand why it is nevertheless such a popular activity.

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53 comments

  1. bg

    People speculate because government *is* the wildcard in the financial crisis. All the other variable pale by comparison. The consensus seems to be: things may be ok if Obama doesn’t do anything really bad. But government generally gets policy wrong, we just don’t which policies, and how bad it will get.

    I wish whats-his-name had won, but now I am left to hope the democrats won’t write another smoot hawley, raise taxes, and prosecute too many businessmen. I’m heavily hedged.

  2. Anonymous

    @bg4:38

    Mate we are all in the cannibals pot. Maybe its time to think of the hole and not the parts. Interestingly enough cannibalism is a sure sign of society in decline/collapse.

  3. Jojo

    All of these people/organizations are trying to exert influence on the decision process, hoping to slant whatever occurs in the direction they most desire.

    I’m concerned that all the names being brandied about seem to be of the usual suspects, the same players that got us where we are today.

    I hope Obama has the fortitude and clarity of mind to bring new blood into positions of power. We need new ideas, not the “same old, same old” failed ideas recirculated.

    Obama should hire Yves for something financial related!

  4. Jojo

    This is a professional production (48 minutes long) from Britain. Well worth watching and quite funny!
    ======================
    Silly Money (part one) – Bremner, Bird and Fortune
    Link

    “Where did all the money go? A satirical look at the global financial system”

  5. Richard Kline

    These Ithinktheyoutta lists put up by media concenrs and their commentators therein are only tangentially connected to actual policy proposals and job vetting recommendations. These statements are very directly connected with currying favor with incoming powerholders and their cliques of ‘followers.’ The media are all involved in frantically ‘signalling’ to factions who said media outlets and their journagandists wish to be permitted to suck up to and latch on like the tapeworms they are. A few outlets on the hard right side, not that I waste precious time immersing myself in their effluent, are taking the first tentative moods to spinning impending big issues so as to minimize the damage that the hard right agenda is expected to take. —But that’s the job of the right media, to spin the public, not to inform. The job of the rest of the media is to sell advertising, of course.

    Expect to be deeply disappointed by Barack’s choices. There is nothing remotely populist about his crew, although they are likely to be competent at wielding power if that is anyone’s concern. Obama has shown that he is a remarkably capable operator, and part of that is knowing who has power, who has ability, and getting those elements wired to his ensemble. I would find this all quite fascinating from a technical standpoint if all that probable skill was harnassed to an even minimally reformist agenda of any substance. Nothing in Obama’s proposals suggest that this is or will be the case, however. We are likely to see much sound and fury producing mouse-size impacts.

  6. River

    Irony of ironies. Bush, as a lame duck, could have made the ‘tough economic policy choices’ that Richard alludes to. In hindsight, how much worse could the election results have been for the Rs if Bush had made the tough policy choices necessary to cleanse the economy? Plus Bush’s legacy is sooo bad already why not tack on a severe recession and rid the economy of the dead wood? Problem is, the deadwood are his pals…So, we get Bush’s last screwup, a wrong headed call on righting the economy. Anyone surprised?

    Economic cleansing would mean immersion in a global recession now but the end would probably be in sight. Or, could that be a train in the tunnel?

    Obama on the other hand is hoping for eitht years in the white house plus he would like to keep the Ds in as many seats as possible. What are the chances that Obama will make tough policy choices now and being blamed for causing Great Depression 2? About ZIP I would guess unless Volker has convinced Obama that a jack in interest rates can be pulled off with limited consequences for the world economy. Would Obama believe such a proposal? I doubt it.

  7. Anonymous

    Startling post. I certainly agree with you in the case of useless boiler plate fed rate predictions. But hasn’t some ink been spilled here predicting various scenarios on credit crisis outcomes that are equally policy dependent?

  8. Anonymous

    I’m going to short the hell out of whatever he does because it ain’t gonna matter. Give me a good bounce.

  9. spare some change?

    Richard Kline

    Precisely; you ‘get it’.

    Pretty much everything we see in public is performance art.

    The bloggers, flawed as they are, attempt to present the truth, which is in very short supply. Supply and demand applies.

    The socially retarded autistic economist/savants can point the way out of this mess, but nobody will listen to them because their posture is wrong and they don’t make eye contact.

    Meanwhile our ‘leaders’ and professional journalists sniff each other’s butts.

    I hate dogs, I hate pack animals, and most especially, I hate you.

  10. Anonymous

    @Richard Kline said….6:27
    may you throw the hard object for me at News-corp/Murdoch and others. Me thinks he is but Skase’s father, go star wars on that if you like or better GOP/Bush are the senator/sith and we are young Vader,BTW GOP people if it makes you feel better the Democrats are the Ewoks.

    My greatest fear out of all of this is can the logy/ism types come together and find a path they can walk together into the future.

    Skippy

  11. ButWhatdoIKnow

    Great point, Yves. I gets back to the fact that so much of what is presented as “news” really isn’t–it’s just an excuse to fill broadcast time or newspaper space. After all, the paid press isn’t as lucky as your (above) average blogger, who can pretty much publish as she likes. They have to put some ink on those fish wrappings to sell them, you know.

  12. Anonymous

    After listening to his little spill on Friday it sounded like more of the same, spend money, print money, increase the deficit, the rich will stay rich, the poor are going to get poorer, inflation will be touted as growth, government will expand and consume more of the economy while producing nothing, SS and Medicare are still going to be unfunded and the retirement age and benefits will have to be cut, they all want their fraud back, and if we try hard we can blow a new bubble.
    A fitting quote by his predecessor.

    ” You can fool some of the people all the time, and those are the ones you want to concentrate on.”
    George W. Bush:

  13. Megan

    @And why do we feel the need to have people, yes, prominent and (hopefully) informed people offer up policy wish lists when Obama has a very large team that is no doubt already inundated with suggestions from their extensive network of contacts and experts?

    An over-looked reason: many are simply expressing a wish to communicate with a leader whose ear at least appears to be open.

  14. Anonymous

    We can also use a process of elimination to narrow down what options will be offered for Obamanomics:

    http://marcambinder.theatlantic.com/archives/2008/11/obamas_economic_transition_tea.php

    Over half are lawyers. At least eight have various amounts of direct personal responsibility for The Bubble Crisis by virtue of previous regulatory service.

    About half are "Wall Streeters" of one kind or another. Rahm Emanuel took his own turn "investment banking", too.

    Only one engineer, Eric Schmidt of Google.

    It's unclear what Granholm and Bonior offer other than a 2 vote bloc for Soviet style subsidies to the UAW.

    Here's a list of economic sector expertise that IS NOT present on Obama's economic transition team:

    Hard sciences.
    Research & Development.
    Real Manufacturing.
    Energy & Fuels Production, "green" or not.
    Civil Engineering & Infrastructure.
    Transportation.
    Agriculture
    Medicine.

    Based on training and experience Obamanomics will consist of: law, politically gamed regulation, political pork barrel spending, paper finance flipping, paper support services (Xerox & Google) and consumer services (Buffett & Pritzker).

    The rest is just a question of detail and how it will be marketed.

    "Say hello to the new boss, same as the old boss".

  15. Arlene Stewasrt

    Thanks Yves for bringing attention to the failure of journalism to serve its purpose which is to 'inform." I hope this blog will continue to address the topic.

    Payment for leveraged M&A deals has all but eliminated funding for journalism and investigative reporting -just one more example of the rape of the American economy by unregulated banking interests.

    The kind of commentary you point out is putrid thin gruel for the public, and just as indigestible.

    Again, thank you.

  16. Matt Dubuque

    The American press completely failed to highlight any of the very deep divisions between Paulson and Bernanke.

    Additionally, when they DID manage to agree on an approach, their hard work was vetoed by Bush on more than one occasion.

    Having a competent person in charge at Treasury (I would hope for Geithner and Summers is a distinctly WORSE choice) and a competent President will help in this regard to a great degree.

    This is also the Chinese view.

    No matter what, it is Paul Volcker who is likely to play the dominant role in shaping fiscal policy and how we deal with the catastrophe, even if his role is behind the scenes.

    If that is true, than we have a fighting chance to avoid Armageddon before the end of Obama’s first term and may be able to handle the coming tsunami humanely and rationally.

    Matt Dubuque

  17. Marcus Aurelius

    bg said…

    “I am left to hope the democrats won’t write another smoot hawley, raise taxes, and prosecute too many businessmen. I’m heavily hedged.”

    _______

    Somebody has to pay our debt. What is your alternative to taxation?

    A tariff act is almost not applicable at this point, as we lost our manufacturing/production base.

    If a crime has been committed, vigorous prosecution and harsh penalties would be a huge disincentive for anyone contemplating doing the crime in the future.

  18. FairEconomist

    he isn’t listening to any us out here in the peanut gallery.

    Au contraire, Yves.

    Politicians *do* listen to the peanut gallery. At least the good ones do, and the one that just got elected is very good. Obama is thinking about how to assemble a coalition to accomplish his various objectives, and the Democratic activists at least are an important resource. There were some pretty obvious VP trial balloons floated (Bayh and Kaine, who both had swing state effects) and when they got shot down Obama went with Biden. The need to keep his coalition together outweighed having a VP from a swing state. He may not be paying attention to the econ blogs per se, but he is listening to the peanut gallery.

    There’s also a philosophical struggle going on for the mind of the public. Right now we are rejecting the current Republican philosophy and a massive crisis is rolling in which allows major changes to conventional wisdom. Obama is nonideological and pragmatic, so his election doesn’t really set the course. Questions about things like whether the banking system should be nationalized are very much open, and pundits are contesting to make their ideas conventional wisdom because Obama is going to end up implementing whatever conventional wisdom becomes. Open Left is a good place to see this kind of thing discussed; they’re unusual in that they discuss the process of punditry as well as pushing their angles.

    The fight over Summers is a proxy fight over the role of government in banking; as a Clinton alum he is an trial balloon for a return to the early Clinton era. Those who think that is inadequate or misguided are trying to shoot him down because Obama will then try a different tack to see if that gets him the support he wants. Even if Summers gets the job if there’s a lot of heat from the left (or the right) expect some of the other econ jobs to go to advocates of that side.

  19. Anonymous

    “Thanks Yves for bringing attention to the failure of journalism to serve its purpose which is to ‘inform.”

    “If you don’t read newspapers you are uninformed. If you do read newspapers you are misinformed.”
    Mark Twain

    Some things never change.

  20. luther

    excellent topic yves. it's quite an interesting phenomenon, especially when the transition team actually posts a website that gives the public an opportunity to submit a suggestion, yet everyone continues to remain part of the peanut gallery.

    then there are those who can see through the silk and smokescreens and offer true transformative ideas with intelligence, but they seem to be so frozen by history with cynicism & skepticism that they can only offer criticism, again from the sidelines.

    and on the other side,

    megan: "An over-looked reason: many are simply expressing a wish to communicate with a leader whose ear at least appears to be open."

    to me, one of the most illuminating comments Mr.O made friday was that the overwhelming majority of suggestions to the website were about which dog to get.

    which says that those who are participating are still trapped in the vacuousness of celebrity to see the potential of citizenship (especially one month after most of them were up in arms over TARP),

    but also, that as megan says, that the leadership has given a sign that they at least 'appear' to be listening.

    perhaps it is time for those who have been skeptical to be more hopefully active, and those who have been hopeful to be more skeptically engaged,

    for those who have been critical to be more constructive and those who have been constructive to be more critical,

    for those who have been spectating to begin to participate, so that those who have been participating will be (eventually) forced to spectate…

  21. Anonymous

    In order to solve the problem, you must first understand it. Bernanke at first thought the mortgage meltdown would not have a significant impact on the economy as it was a small, contained problem. Theoretically, he was correct. He finally had to call in the Wall Street sharks to explain just how these new “financial products” worked. That’s when he panicked. (This is a paraphrase, please don’t nit pick it to death.)

    Greenspan now admits that not only did he not “get it” (understand the problem), he is now scratching his aging bald head trying to understand why the “model that worked so well for 40 years” failed him.

    What the the highly educated professional losers don’t understand is that we are witnessing the collapse of the economic systems that have been in place since WWII. First Communism and now Capitalism have or are imploding.

    The Republicans had the right man for the job – Ron Paul. He not only has predicted this whole mess for quite a long time, he has offered a solution – a return to the Constitution before it was voided by FDR. Granted, it does not offer immediate remedies to the immanent collapse of the economy, but it points the way. The Austrian school, with its emphasis on sound money, only reinforces the wisdom of the founding fathers.

    Trying to return the economy to where it was at the beginning of THIS century won’t work. Bringing back the Constitution that was in effect at the beginning of the last century will give us a sound foundation to rebuild a stable, prosperous economy.

  22. luther

    with that said, i humbly propose a suggestion to the naked crew.

    the proposal is as follows:

    yves can select 1 topic that is actively being discussed here that is being overlooked and underdiscussed within the current framework of the new economic advisory team
    (anon @ 9:27 has a good list to choose from to which i would also like to add 'transparency & regulatory issues')
    and do a post on it.

    the comments section will be open in the spirit of offering suggestive solutions and constructive criticism.

    once completed, the link will be sent to change.gov. whether they choose to listen or not is their choice.

    consider it an open source position paper.

    personally, i choose to believe at this moment that they very well might, if for no other reason that there are so many intelligent & informed individuals on this blog, that the insight potentially generated may be too interesting to ignore.

    however, even if they choose not to, the point is in not its immediate effect but in attempting to build a model of collective constructive dialogue, even if those possibilities are only considered out of the ashes of the old game.

    besides, do we really have anything to lose by trying?

    “You never change things by fighting the existing reality.
    To change something, build a new model that makes the existing model obsolete.”

    – R. Buckminster Fuller

    please excuse the verbosity. it's a sunny sunday morning and it's possible the holy spirit may have gotten into my athiest bones :)

  23. a

    “Rahm Emanuel took his own turn “investment banking”, too.”

    Made himself 12 million with one deal, apparently. Anyone know what the deal was?

  24. Anonymous

    To those who would say there is no substantive difference between the parties and their politicians, I find this a dramatic over-simplification. To point out that both parties are beholden to special interests and that both parties are apt to do really stupid things when given unchecked power is not to prove that they are *equally* bad at any one time. Yes, no matter what party is in power, the rich and powerful will try to perpetuate their riches and their power through the gears of government. This is obvious. It does not mean that the two candidates were equally bad regarding this point.

    As an aside, I cannot stand when someone thinks a point has been proven by pointing out one single problem with another side’s argument. It doesn’t make you right just because someone else is wrong.

    It of course all depends on one’s perspective and what one values as to whether the following list is important (and I certainly have no monopoly on the truth or some special ability to predict the future), but it would astonish me to see Obama take the following actions:

    1. Actively try to dismantle regulation in an industry when obvious market failures exist (whether it is during a California energy crisis or when it becomes clear that a financial system is out of control…you can let your friends make money, but you can also try to stop them from hoisting themselves on their own petard…isn’t this exactly what happened with Enron and the financials? Yes, Clinton bears his fair share of the blame for starting the process with financials, but the current administration bears the blame for not realizing it was a grave mistake and not reversing course, not to even mention how it exacerbated the situation).

    2. Actively lead a country into a war on obviously false pretenses (please do not say this is MM QBing or a claim based on hindsight; you can say that I and *millions* of others were lucky when we claimed that the administration was lying during the prelude to the war; you certainly cannot claim that we didn’t make our position about the lying quite clear well before the invasion).

    3. Actively try to subordinate energy conservation measures (at some point, people are finally going to wake up and realize this isn’t just another issue but may be one of the most important issues).

    So, in the end, yes, I am frightened that the Democrats control the executive branch and both houses of the legislative branch, and I am *really* frightened that they are now in de facto control of Fannie, Freddie, even AIG to some degree, and maybe the automakers because this power appeals to their worst inclinations of meddling by the government (my prediction is that this will all end very badly). But please, this does not in any sense mean that I wouldn’t be much, much more worried had the other ticket been victorious on Tuesday. It was, and always will be, a relative comparison.

  25. Anonymous

    I am relieved to finally see and hear Peter Schiff in action.

    I am gratefull that I never again have to waste a second of my time assuming that this wing nut has anything to say worth the listen.

  26. Mean Mister Mustard

    Yves, FairEconomist is right: one thing I am sure Obama knows is that he has to find a new political path. Many business types (including most commenters here) think that there is a clear path and that solutions are obvious: these people are largely the problem. Obama knows he needs to maximize his optionality while minimizing theirs: we have been running a Latin American style kleptocracy and almost any way he stops that is good for the economy.

  27. Anonymous

    a,

    rahm emmanuel’s big deal’s at Wasserstein were (i) Commonwealth Edison’s acquisition of Peco Energy and (ii) GTCR Golder Rauner’s acquisition of SBC Communications. it’d guess rahm made most of his money at Wasserstein from those 2 deals. but if you care, you could see if his financial disclosure to congress specifies compensation from particular deals at wasserstein, rather than rahm’s aggregate comp.

  28. doc holiday

    Picking Obama administration people reminds me of lotto tickets, but the process is also like the concept of having a million monkey's at keyboards all typing, in the hopes that this group of chosen ones will re-create War & Peace or some Shakespeare-like literature.

    Obama will have the backdrop of Chrysler, Ford & GM going into technical default within the next several weeks, a sustained crashing economy, higher unemployment going parabolic, increasing amounts of massive unsold homes and foreclosures, an intensifying global recession and a shattered America filled with citizens untrained to re-tool for the future. The government is running on fumes and if Obama could easily push that envelope the wrong direction.

    Theoretical tax breaks sound great to some and awful to others, but the illusion of the tax mechanism to solve this serious systemic problem is total bullshit — thus, Obama will depend on seriously innovative people, versus any empty gesture connected to the ineptness of nepotism! Placing his friends into power, will be a chilling miscalculation — unless they are intensively smart and honest!!!!

  29. Anonymous

    @Luther11:06
    In response to your suggestion to create a open source position paper.

    I would like to summit the following idea. Why has no one created a national peoples health/posterity commodity. In which the market trades on the well being of citizens health, education, standard of living etc?

    If you wanted to trade in futures why not important ones like the real futures of peoples wellbeing? Are citizens not the greatest wealth a Nation/County has.

    Skippy

  30. Anonymous

    @above skippy/peoples stock/commodity
    Forgot to include that at birth the child would receive a share in it. Now wouldn’t that be great, every one would own a piece of the pie at birth and hopefully motivate people to better out comes for all!

    skippy

  31. Anonymous

    The only thing that has occurred is a change in managment and the name on the sign of the whore house along with the replacement of a few of the whores. A different color and flavor of icing on a rotten cake.

  32. River

    Skippy said…’Are citizens not the greatest wealth a Nation/Country has.’

    We, the citizens, were important to fight wars for TPTB before the advent of the all volunteer army and the contractors.

    We, the citizens, are important to fill all those mid level positions that isolate TPTB from the great unwashed…you know, the cops, firemen, councilmen, mayors, pizza delivery people, factory workers, etc.

    We, the citizens, are especially important on election day in a democracy.

    Of course the citizens were seen in a different light under Stalin, Hitler, Mao, and countless other dictators who did not have a problem killing off tens of millions of citizens.

    We, the citizens, are important when we conform to the consumerist script that has been written for us by TPTB but how important are we, the consumers, now that we can no longer deliver on the lines of the consumerist script?

    Funny, when I was a kid taking civics in HS we were refered to as citizens. I cannot remember exactly when the citizen became the consumer but it is a huge downgrade of status, imo.

    How important are nonconsuming consumers to TPTB?

  33. Yves Smith

    Z.O.G. has, two days running, made OT comments about the Jewish-ness of various official groups. I deleted his comment above and will delete any further material of that sort. I have been criticized in the past for occasionally taking Israel to task, so I am hardly a knee-jerk supporter of Jewish-related issues, but I will not tolerate bigoted commentary of ANY sort here. Get your own blog and see how many people will read that sort of bile.

  34. Anonymous

    @River said….
    Defeatist! Was only trying to respond positively to Luther’s suggestion.

    Unfortunately I agree with all of your statements concerning the treatment of citizens, I can still dream can’t I or is that gone too.

    skippy

  35. luther

    skippy — now that’s thinking out of the box…very bucky fuller of you…cheers

    while this is a noble ideal, how might it work practically?

    would it be traded as a debt instrument (like a bond) or an equity instrument?

    who would issue this instrument? a public entity, private entity or public/private?

    and would there be a market for such an illiquid asset?

    philosophically, we have already commodified the earth and look where that got us. what are the ramifications of transforming the well-being of the human into a commodity?

    would that not complete river’s tragic cycle — from citizen to consumer to commodity itself?

    this is not meant to discourage or denigrate the idea, just to give you some food for thought if you care to flesh it out…

  36. Anonymous

    It should be noted that many speculators are political operators. They have little interest in correctly predicting events. They will say the darndest things in order to come across as credible in their own political camp. In this way they burnish their credentials with the party faithful and reaffirm their positions as men of importance in the political world.

    For example, does anybody seriously think Obama listens to advice that Karl Rove penned in some opinion piece? Nevertheless Republicans will go ooh and aah over that smart Mr Rove. And if Obama gets something wrong then Karl can nod sagely and say the man should have listened to me. And the faithful will verily agree. So it’s all about puffing up his own importance, and in some lucky instances his opinions can even help shape Republican policy.

  37. luther

    river — yes, it's very hard to disagree with this, well said.

    but did we, the citizens, not voluntarily subjugate ourselves?

    e.g. a rasmussen report on 10/05 stated "If they could vote to keep or replace the entire Congress, 59% of voters would like to throw them all out and start over again. The latest Rasmussen Reports national telephone survey found that just 17% would vote to keep the current legislators in office. "

    now, i don't know the exact %'s, but it wouldn't surprise me if over 90% of incumbents got re-elected… AGAIN.

    did TPTB pull the levers or push the buttons? even they could (and have), did they even need to or did we, the citizens, walk willingly into the fire?

    my cynical side says that tuesday was more a victory for the consumers that bought BO as the citizens that voted for him (and so it has in the past, but now the consumer base has been expanded).

    to attempt an answer to your final question, considering that this country has a rather large debt problem, it would seem that TPTB needs to cajole the nonconsuming consumer to become a productive producer once again in order to pay back private & public debt and rectify trade imbalances.

    if so, is that not an opportunity for a negotiation between the citizen and the state? or will we the citizen again voluntarily abdicate that position to TPTB?

  38. Anonymous

    I want O’Bama to push for this:

    New Federal Loan Program announced by the Treasury Department.

    A new Federally sponsored loan program is being announced today to help spur consumer spending. The new loan program will be called the Federal Consumer Lending Program (FECOLP). These loans will be available for large ticket consumer items; such as wide-screen TV’s and Automobiles. Interest rates will be fixed every year by the Treasure Department, with an initial rate of 1.5%. The new loan program calls for interest payments to be deferred. On selected items, initially SUV’s, principle payments can also be deferred for up to 10 years. This is expected to jump-start
    the ailing US automobile industry.

    FECOLP authorizes banks and other lending institutions to sell the loans directly to consumers. The loans are then immediately purchased by Fecol-Mae – a new Government Sponsored Enterprise (GSE) – which packages
    the loans into government guaranteed AAA rated securities, selling them on the open market. The Treasury Department expects FECOLP Loans – known as “Fecol Loans” by the Consumer Lending Industry – will help spur economic
    growth, create jobs, and end the economic malaise the country is currently experiencing.

    Part of the Fecol Authorization Act also provides for State Fecol Guarantee Agencies which – modeled on the widely successful Student Lending Guarantee Agencies – would help guarantee the Fecol Loan’s AAA bond rating.

  39. Anonymous

    Luther,

    “select 1 topic that is actively being discussed here that is being overlooked and underdiscussed within the current framework of the new economic advisory team
    (anon @ 9:27 has a good list”

    My greatest fear is the New Economic Advisory Team is not overlooking and underdiscussing the listed topics.

    I fear they’re doing it from a standpoint of personal ignorance those fields, with demonstrated lack of either academic training or experience and with conscious exclusion of anyone likely to have real expertise.

    http://robertreich.blogspot.com/2008_07_01_archive.html

    Here’s an example of the alternate universe Robert Reich inhabits:

    The Federal Reserve Board’s “beige book” for June and July offers a clear explanation for why the economy has slowed to a crawl. It shows American consumers cutting way back on their purchases of everything from food to cars to appliances to name-brand products. As they do so, employers inevitably are cutting back on the hours they need people to work for them, thereby contributing to a downward spiral.

    Reich has also made 2008 blog posts that show he apparently he believes recent Census figures that continue to show marginal household income growth.

    The only useful input I could offer to such people is that at least 10 of them need to yield their chairs to persons with real subject matter expertise in the sectors I listed.

    Anon @9:27

  40. luther

    anon@9:27 — but they’re NOT gonna yield their chairs. question remains are we going to continue to spectate and allow our fears to make reality or are going to participate (not only in the way above but others as well) in order to help reshape the reality?

    anon@12:24 — now we’re talking…

    Industries are based on “formats that are basically legacies of military hierarchies,” says Semler, which neglect or deny the power of human intuition and democratic participation.

    http://mitworld.mit.edu/video/308/

  41. nemo

    “The early Bush Treasury secretaries were unmemorable …”

    Paul O’Neill was rather memorable, partly for shooting off his mouth in a job where rarely anything memorable gets said, and partly for being virtually the only Bush cabinet member in touch with basic reality.

    I believe he was the guy who reported that Dick Cheney said that Reagan proved that deficits don’t matter. That was memorable.

    Snow, on other hand, was a total nonentity.

  42. spare some change?

    Luther @ 6:32:

    The masses are divided, but the wealthy know precisely what they want and lobby for it with humorless ferocity.

    We got precisely two pushes for populist unity this election cycle, and they came from the Republican party. And I wasn’t impressed.

    Ron Paul’s revolution got several hundred thousand people to click on a Donate button on his website within a 24 hour period. A fitting demonstration of the power and the weakness of the Internet as an organizational medium.

    Palin’s approach was, “If there’s one thing I think we can all agree on, it’s that we hate atheists. And fags. And TERRORISTS!” A much scarier value proposition – Palin is one to keep on the lookout for. And again, it’s unity in the name of destruction and base impulses, not any kind of spiritual uplifting or newly invigorated citizens taking back their democracy. More like, newly emboldened vassals with a nod and a wink from above to commit acts of violence agaist the political opposition.

    It’s hard to justify putting the effort into rebuilding democracy when there’s someone like Sarah the Destroyer lurking in the background, waiting until unrest peaks, plotting her big move. Especially when that unrest is being fomented (maybe not deliberately) by the enemies of democracy.

    There are only a few thousand real ‘citizens’ (corporations and fabulously wealthy individuals) in the world and everyone knows who they are. Those are the guys whose votes count. Everyone else is hoping to become one of the citizens, or to have undue influence on the citizens.

  43. spare some change?

    To expand on one of the points I made in the previous post, as a practical matter we have very little to fear from terrorists, either Al Qaeda or the homegrown variety. Most of these guys aren’t going to get anywhere, or will be very limited in their impact.

    The real threat is populists like Sarah the Destroyer who can turn millions of voters into violent thugs.

    I know she has no credibility with the intelligentsia, but there’s a reason she got thrown out there on the national stage. Populism, the virulent nasty kind, might be the only weapon the Republicans have left for 2012. She’s much more dangerous than she looks. And notice how she deflected criticism of her as “cruel”? Yes indeed, only a woman in 21st century America can play the crowds like she can. Young enough to have some looks, old enough to be crafty, vulnerable enough so any appalled onlookers attacking her will be made to look like the aggressors.

  44. Juan

    My mention of Semler was based on a belief that we will not advance without a change in form of organization, a _real_ shift in control to those actually doing the work, which is not ‘quality circles’, not anachronistic union bureaucracies, not management gurus…and that Semler is not speaking from theory but what was actually accomplished at Semco and, from my experience, need not be firm specific.
    Democratization of the workplace spills out, helps democratize and raise levels of responsibility throughout society but is no quick fix magic button and remains within the realm of reformism.

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