Post by TonyV on Nov 11, 2010 17:07:27 GMT -5
By Timothy Egan, The New York Times
03 November 10
If I were one of the big corporate donors who bankrolled the Republican tide
that carried into office more than 50 new Republicans in the House, I would be
wary of what you just bought.
For no matter your view of President Obama, he effectively saved capitalism. And
for that, he paid a terrible political price.
Suppose you had $100,000 to invest on the day Barack Obama was inaugurated. Why
bet on a liberal Democrat? Here's why: the presidency of George W. Bush produced
the worst stock market decline of any president in history. The net worth of
American households collapsed as Bush slipped away. And if you needed a loan to
buy a house or stay in business, private sector borrowing was dead when he
handed over power.
As of election day, Nov. 2, 2010, your $100,000 was worth about $177,000 if
invested strictly in the NASDAQ average for the entirety of the Obama
administration, and $148,000 if bet on the Standard & Poors 500 major companies.
This works out to returns of 77 percent and 48 percent.
But markets, though forward-looking, are not considered accurate measurements of
the economy, and the Great Recession skewed the Bush numbers. O.K. How about
looking at the big financial institutions that keep the motors of capitalism
running - banks and auto companies?
The banking system was resuscitated by $700 billion in bailouts started by Bush
(a fact unknown by a majority of Americans), and finished by Obama, with help
from the Federal Reserve. It worked. The government is expected to break even on
a risky bet to stabilize the global free market system. Had Obama followed the
populist instincts of many in his party, the underpinnings of big capitalism
could have collapsed. He did this without nationalizing banks, as other
Democrats had urged.
Saving the American auto industry, which has been a huge drag on Obama's
political capital, is a monumental achievement that few appreciate, unless you
live in Michigan. After getting their taxpayer lifeline from Obama, both General
Motors and Chrysler are now making money by making cars. New plants are even
scheduled to open. More than 1 million jobs would have disappeared had the
domestic auto sector been liquidated.
"An apology is due Barack Obama," wrote The Economist, which had opposed the $86
billion auto bailout. As for Government Motors: after emerging from bankruptcy,
it will go public with a new stock offering in just a few weeks, and the United
States government, with its 60 percent share of common stock, stands to make a
profit. Yes, an industry was saved, and the government will probably make money
on the deal - one of Obama's signature economic successes.
Interest rates are at record lows. Corporate profits are lighting up boardrooms;
it is one of the best years for earnings in a decade.
All of the above is good for capitalism, and should end any serious-minded
discussion about Obama the socialist. But more than anything, the fact that the
president took on the structural flaws of a broken free enterprise system
instead of focusing on things that the average voter could understand explains
why his party was routed on Tuesday. Obama got on the wrong side of voter
anxiety in a decade of diminished fortunes.
"We have done things that people don't even know about," Obama told Jon Stewart.
Certainly. The three signature accomplishments of his first two years - a health
care law that will make life easier for millions of people, financial reform
that attempts to level the playing field with Wall Street, and the $814 billion
stimulus package - have all been recast as big government blunders, rejected by
the emerging majority.
But each of them, in its way, should strengthen the system. The health law will
hold costs down, while giving millions the chance at getting care, according to
the nonpartisan Congressional Budget Office. Financial reform seeks to prevent
the kind of meltdown that caused the global economic collapse. And the stimulus,
though it drastically raised the deficit, saved about 3 million jobs, again
according to the CBO. It also gave a majority of taxpayers a one-time cut - even
if 90 percent of Americans don't know that, either.
Of course, nobody gets credit for preventing a plane crash. "It could have been
much worse!" is not a rallying cry. And, more telling, despite a meager uptick
in job growth this year, the unemployment rate rose from 7.6 percent in the
month Obama took office to 9.6 today.
Billions of profits, windfalls in the stock market, a stable banking system -
but no jobs.
Of course, the big money interests who benefited from Obama's initiatives have
shown no appreciation. Obama, as a senator, voted against the initial bailout of
AIG, the reckless insurance giant. As president, he extended them treasury loans
at a time when economists said he must - or risk further meltdown. Their
response was to give themselves $165 million in executive bonuses, and funnel
money to Republicans this year.
Money flows one way, to power, now held by the party that promises tax cuts and
deregulation - which should please big business even more.
President Franklin Roosevelt also saved capitalism, in part by a bank "holiday"
in 1933, at a time when the free enterprise system had failed. Unlike Obama, he
was rewarded with midterm gains for his own party because a majority liked where
he was taking the country. The bank holiday was incidental to a larger public
works campaign.
Obama can recast himself as the consumer's best friend, and welcome the animus
of Wall Street. He should hector the companies sitting on piles of cash but not
hiring new workers. For those who do hire, and create new jobs, he can offer tax
incentives. He should finger the financial giants for refusing to clean up their
own mess in the foreclosure crisis. He should point to the long overdue
protections for credit card holders that came with reform.
And he should veto, veto, veto any bill that attempts to roll back some of the
basic protections for people against the institutions that have so much control
over their lives – insurance companies, Wall Street and big oil.
They will whine a fierce storm, the manipulators of great wealth. A war on
business, they will claim. Not even close. Obama saved them, and the biggest
cost was to him.
03 November 10
If I were one of the big corporate donors who bankrolled the Republican tide
that carried into office more than 50 new Republicans in the House, I would be
wary of what you just bought.
For no matter your view of President Obama, he effectively saved capitalism. And
for that, he paid a terrible political price.
Suppose you had $100,000 to invest on the day Barack Obama was inaugurated. Why
bet on a liberal Democrat? Here's why: the presidency of George W. Bush produced
the worst stock market decline of any president in history. The net worth of
American households collapsed as Bush slipped away. And if you needed a loan to
buy a house or stay in business, private sector borrowing was dead when he
handed over power.
As of election day, Nov. 2, 2010, your $100,000 was worth about $177,000 if
invested strictly in the NASDAQ average for the entirety of the Obama
administration, and $148,000 if bet on the Standard & Poors 500 major companies.
This works out to returns of 77 percent and 48 percent.
But markets, though forward-looking, are not considered accurate measurements of
the economy, and the Great Recession skewed the Bush numbers. O.K. How about
looking at the big financial institutions that keep the motors of capitalism
running - banks and auto companies?
The banking system was resuscitated by $700 billion in bailouts started by Bush
(a fact unknown by a majority of Americans), and finished by Obama, with help
from the Federal Reserve. It worked. The government is expected to break even on
a risky bet to stabilize the global free market system. Had Obama followed the
populist instincts of many in his party, the underpinnings of big capitalism
could have collapsed. He did this without nationalizing banks, as other
Democrats had urged.
Saving the American auto industry, which has been a huge drag on Obama's
political capital, is a monumental achievement that few appreciate, unless you
live in Michigan. After getting their taxpayer lifeline from Obama, both General
Motors and Chrysler are now making money by making cars. New plants are even
scheduled to open. More than 1 million jobs would have disappeared had the
domestic auto sector been liquidated.
"An apology is due Barack Obama," wrote The Economist, which had opposed the $86
billion auto bailout. As for Government Motors: after emerging from bankruptcy,
it will go public with a new stock offering in just a few weeks, and the United
States government, with its 60 percent share of common stock, stands to make a
profit. Yes, an industry was saved, and the government will probably make money
on the deal - one of Obama's signature economic successes.
Interest rates are at record lows. Corporate profits are lighting up boardrooms;
it is one of the best years for earnings in a decade.
All of the above is good for capitalism, and should end any serious-minded
discussion about Obama the socialist. But more than anything, the fact that the
president took on the structural flaws of a broken free enterprise system
instead of focusing on things that the average voter could understand explains
why his party was routed on Tuesday. Obama got on the wrong side of voter
anxiety in a decade of diminished fortunes.
"We have done things that people don't even know about," Obama told Jon Stewart.
Certainly. The three signature accomplishments of his first two years - a health
care law that will make life easier for millions of people, financial reform
that attempts to level the playing field with Wall Street, and the $814 billion
stimulus package - have all been recast as big government blunders, rejected by
the emerging majority.
But each of them, in its way, should strengthen the system. The health law will
hold costs down, while giving millions the chance at getting care, according to
the nonpartisan Congressional Budget Office. Financial reform seeks to prevent
the kind of meltdown that caused the global economic collapse. And the stimulus,
though it drastically raised the deficit, saved about 3 million jobs, again
according to the CBO. It also gave a majority of taxpayers a one-time cut - even
if 90 percent of Americans don't know that, either.
Of course, nobody gets credit for preventing a plane crash. "It could have been
much worse!" is not a rallying cry. And, more telling, despite a meager uptick
in job growth this year, the unemployment rate rose from 7.6 percent in the
month Obama took office to 9.6 today.
Billions of profits, windfalls in the stock market, a stable banking system -
but no jobs.
Of course, the big money interests who benefited from Obama's initiatives have
shown no appreciation. Obama, as a senator, voted against the initial bailout of
AIG, the reckless insurance giant. As president, he extended them treasury loans
at a time when economists said he must - or risk further meltdown. Their
response was to give themselves $165 million in executive bonuses, and funnel
money to Republicans this year.
Money flows one way, to power, now held by the party that promises tax cuts and
deregulation - which should please big business even more.
President Franklin Roosevelt also saved capitalism, in part by a bank "holiday"
in 1933, at a time when the free enterprise system had failed. Unlike Obama, he
was rewarded with midterm gains for his own party because a majority liked where
he was taking the country. The bank holiday was incidental to a larger public
works campaign.
Obama can recast himself as the consumer's best friend, and welcome the animus
of Wall Street. He should hector the companies sitting on piles of cash but not
hiring new workers. For those who do hire, and create new jobs, he can offer tax
incentives. He should finger the financial giants for refusing to clean up their
own mess in the foreclosure crisis. He should point to the long overdue
protections for credit card holders that came with reform.
And he should veto, veto, veto any bill that attempts to roll back some of the
basic protections for people against the institutions that have so much control
over their lives – insurance companies, Wall Street and big oil.
They will whine a fierce storm, the manipulators of great wealth. A war on
business, they will claim. Not even close. Obama saved them, and the biggest
cost was to him.
