The horizon is not so far as we can see, but as far as we can imagine

Perhaps record bonuses and no new lending is what Obama wanted

Goldman Sachs is due to pay record bonuses, and the financial sector as a whole is likely to do the same.  Meanwhile, new mortgages and refinanced mortgages, as well as business lending is dead in the water.  If it isn’t government underwritten, or a credit card, forget it.

While I can’t say I predicted record bonuses this year, I and many others did predict that the bailouts wouldn’t get lending going again, because it was better for banks to keep the money on hand for buyouts and leveraged games, and many of them truly are massively impaired.

In other words, that the bailouts wouldn’t do what they were sold as doing—increase lending, was predicted.  Repeatedly.

Not much we can do when the people in charge don’t listen to those with track records, and deliberately hire those whose track records suck.

Well suck at helping ordinary people.  The people hired or retained by Obama  to run the US economy have amazing track records helping executives get paid obscenely, making sure large banks make fake profits and bailing out executives whose greed causes disasters.

Perhaps Obama hired for what he wanted, and his hires are executing policies that accomplish what Obama wants?

Take your pick.  Either Obama is an incompetent or his policies are accomplishing what he wants them to.


Central Banks put 63% of New Money into Euros and Yen


The one post on Goldman Sachs you NEED to read


  1. Well, it’s a bit of a false dichotomy, don’t you think? It’s merely possible that he believe(s/d) that this will work. I mean, there are enough people who do, if you get off the blogs. And of course, believing it will work is still not exclusive of malice and/or incompetence.

  2. Douglas McElroy

    You know, I used to say the same thing about Bush – that the best case was that he was criminally incompetent/malfeasant. So refreshing to be able to say the same about Obama. I read enough from people like you and Stirling to know that Obama was a centrist, so this isn’t a surprise, but it sure is disappointing. I was hoping for an end to the the stream of days when, in the immortal words of Moe Sizlak, I was ‘choking on my own rage’. Not so much…

    How do you do it? How do you keep tracking the train wreck without wanting (figuratively) to just blow your brains out? A sense of empathy and responsibility compel me to try to stay informed, but after 6, 7, 8 years of it I am just emotionally exhausted.

    Best wishes for your continued mental health. You seem to be the last of the BOP crew still writing. I miss that team.

  3. Ian Welsh

    No, it’s not a false dichotomy. If he thinks it will work he’s incompetent.

  4. S Brennan

    “I read enough…to know that Obama was a centrist”

    Sorry, a guy who has the same policies as Bush is NOT a centrist…Obama’s RIGHT WING.

    Obama, had he followed Gore would be considered to the right of Reagan. Obama’s faithful followers are clueless.

  5. Ian Welsh


    Stirling will probably start writing again at some point.

    In point of fact these days I’m mostly not doing it. I don’t follow this stuff day to day like I used to. It’s not really necessary to, in any case. These things take months to years to play out anyway.

  6. Douglas McElroy

    S. Brennan: “Obama is RIGHT WING…Obama’s faithful followers are clueless.”

    Hmmm, well I guess there is right wing and there is right wing. I think one could plausibly make a case for a substantive difference between Obama and Rush Limbaugh, for instance. Or any number of Republican Senators. That said, that doesn’t mean I am satisfied with what Obama is doing or how he is doing it. I think he’s blowing the implementation on a number of issues, and just outright wrong on the policy on others. We haven’t seen the repudiation of right wing policies on economics, civil rights or the role of the military that I think are necessary. Obama was (barely) the best of a bad lot of choices, as far as I am concerned. I was an Edwards supporter, and wouldn’t that have turned out to be a terrible hash. Hard to argue with those who thought Edwards was a phony now… Whether he meant it or not, the general position Edwards took was one I favored. Obama NEVER presented himself as a fighter and I knew that and knew that I was going to be disappointed by an Obama presidency. A lot.

    I suppose when I say centrist I mean a centrist Democrat, which is, in fact, pretty conservative on an absolute scale. So, perhaps not such a disagreement there. To the extent that your last sentence is directed at me, I would like to think I am not clueless. In no way can I be considered a faithful follower though…

  7. david burn

    yer lookin’ at all of this from the wrong end.

    what did cheney/bush/rove do during their 8 years ?

    funneled as much taxpayer $$$ to the people / corporations that would then recycle / launder that $$$ back to the re-election / election campaigns.

    this is what rahm emmanuel is doing also. funnel as much taxpayer $$$ to the people / corporations that then turn around and recycle / launder back to the party in power for re-election/election campaigns.

    the military/industrial/mercenary complex did it for cheney/bush/rove and now wall street is doing the same for obama/emmanuel/axelrod.

    did the real estate industry do this for just cheney/bush/rove or are is it also doing it for obama/emmanuel/axelrod ???

  8. matt

    Good News on Wall Street Means… What Exactly?

    It’s literally amazing to me that our press corps hasn’t yet managed to draw a distinction between good news on Wall Street for companies like Goldman, and good news in reality.

    I watched carefully the reporting of the Dow breaking 10,000 the other day and not anywhere did I see a major news organization include a paragraph of the “On the other hand, so fucking what?” sort, one that might point out that unemployment is still at a staggering high, foreclosures are racing along at a terrifying clip, and real people are struggling more than ever. In fact the dichotomy between the economic health of ordinary people and the traditional “market indicators” is not merely a non-story, it is a sort of taboo — unmentionable in major news coverage.

    What’s so tiresome about all of this is that no one reports this stuff as a political story. This is politics at its most basic. The Dow is going up, sure, but what does that mean, if the rest of the economy still sucks?

  9. Naomi Klein wrote about Obama’s affinity for Chicago (Way) School economics in June of 2008. At the time it was one of those articles I figured would either turn out to be true or not. It didn’t take long once Obama took office to figure out she was right.

  10. Forgot to add – there actually is a third option, I think. People can be so enamored of an idea that they just don’t reconsider it until it’s proven so wrong that a blind idiot could see it was wrong. I can’t pretend to know what’s on Obama’s mind, but I number this among the possibilities.

  11. Forgot to add – there actually is a third option, I think. People can be so enamored of an idea that they just don’t reconsider it until it’s proven so wrong that a blind idiot could see it was wrong. I can’t pretend to know what’s on Obama’s mind, but I number this among the possibilities.

    That’s sort of what I was alluding to, but more as a collective delusion. Is delusional thinking incompetence? Not sure about that. That’s the dichotomy I was addressing.

  12. I think we have to look at what’s gone down and try to reverse engineer the strategy that led to it. The facts show that enormous funding and guarantees, as well as favorable treatment like bending the rules, were directed to Wall Street without corresponding reforms. While the agenda was to increase lending, no effort was made in that that direction, and, of course, it did not happen.

    Was there a hidden agenda? I believe so. It seems to me that the hidden agenda has been to recapitalize the financial system through extraordinarily favorable treatment, bordering on the unethical if not slipping into the illegal, while reflating the toxic debt.

    Why would this policy be preferred. Some see a conspiracy at the top to protect wealth, but I think it is more complex than that. There is no denying that the tremendous power of the oligarchs did play a considerable part politically. But there is more to it than corruption of the system. There is also a plausible rationale.

    The core belief of the elite pool from which government financial and economic advisors is drawn believes that the financial system is the backbone of the economy and must therefore be served above all other national interests with respect to domestic affairs, on a par with the military in foreign affairs. Of course, the financial system is not limited to domestic affairs and is a partner with the military in projecting US power abroad.

    Whether this assumption is correct could be debated but it isn’t, because the elite pool from which the government draws its advisors is intellectually captured by the prevailing financial and economic paradigm. This paradigm is predominantly neoliberal, with some New Keynesians thrown in. However, the New Keynesians were able to get some government spending, e.g., for transfer payments and infrastructure, into the stim, this was overshadowed by less effective tax reductions, and by far, most of the funding went to financial rescue (aka bailouts). This has resulted in the real economy suffering from overcapacity due to falling demand, along with the creation of more asset bubble due to excess liquidity not being invested productively.

    What this means basically is that the problem is seen as one with markets rather than with the real economy, that is, the output gap and consequent underemployment. This means that the productive capacity of the economy is underutilized, at an cost of trillions in lost GDP. The solution from this point of view is to stabilize markets near prior levels first instead of dealing directly with undercapacity. This is an “opportunity cost” because opponents claim that different choices could reduce the output gap and underemployment be raising aggregate demand through direct fiscal remedies that are affordable, since sovereign issuers of their own currency are not revenue constrained, and the threat is deflation, not inflation.

    Some Post Keynesians would argue, first, that this prioritization is backwards, that falling demand is the problem that government needs to be addressing first, and second, that modern monetary theory reveals that neoliberal monetary and fiscal assumptions are erroneous, in that they are not based on how the relation between the governmental and non-governmental system actually works. This debate is not taking place other than on some more recondite blogs like Bill Mitchell’s billyblog and Steve Keen’s DebtWatch. Stirling did host an FDL Salon with Post Keynesian doyen Paul Davidson recently here

  13. And you see this in some mainstream liberal econblogs—the theme that unless the financial sector is held together, there would be too much instability to implement any other kind of initiative for economic remediation.

  14. S Brennan

    Statement: “I think one could plausibly make a case for a substantive difference between Obama and Rush Limbaugh, for instance.” – Douglas McElroy

    Reply: Yes we could, but “I think one could plausibly make a case for a substantive difference between [Rush Limbaugh] and [Nazis], for instance” Which means what? That Rush Limbaugh is a liberal? What kind of poor thinking is that. Criminals us this type of logic to justify their crimes…hey I’m a murderer…not a murdering child molester. Both are criminals. K?

    Statement: “Obama was (barely) the best of a bad lot of choices, as far as I am concerned. I was an Edwards supporter, and wouldn’t that have turned out to be a terrible hash.” – Douglas McElroy

    Reply: Uhm…I’m sure you didn’t mean to do this, but your phrase is IDENTICAL to those made by Bush supporters right after 911, “wouldn’t that have turned out to be a terrible [if Gore had been elected]” So my answer to you and Bush supporters is an emphatic no. The nation chose Gore and 5 folks gave Bush the election. The Democratic party chose Clinton and the party elite gave Obama the nomination. Both Obama & Bush suffer the same flaws, both the suffer the same policies and both had empty resumes when they entered the White House. Both were appointed over people who had deep resumes. Both Clinton and Gore were pilloried by the press with the help of the democratic party elite. Obama is Bush’s third term, Obam is a RIGHT WING President.

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