Those who recall the early Clinton years may see some parallels to today, albeit in a watered-down form now.
Clinton came into office, as political scientist/economist Tom Ferguson put it, “chanting one word as a mantra: ‘change.” He then appointed:
an economic team that looked like Wall Street, a foreign policy team that resembled Jimmy Carter’s, and a raft of other appointments that looked, if not exactly like the Business Council (still a white male bastion), then perhaps the affluent clientele of some exclusive spa or ski resort.
Clinton announced policies apparently intended to please a lot of people that seemed to make no one happy: talk re balancing the budget, tax increases on the rich, a strong dollar policy. And Hillary pressed forward with the health care reform plan, which seemed to garner front page coverage almost every day during the first year in office. The economy languished and Clinton’s ratings fell.
Clinton had had a narrow base of business support, and it had included Wall Street. His initial bond-market friendly and strong dollar stance had stood him in good stead with them. But pretty much everyone in finance had taken levered bets on interest rates staying low or falling further. When Greenspan raised Fed fund rates in early 1994, the result was massive derivatives losses, a bigger wipeout than the 1987 crash. Clinton backed the widespread calls for investigations and more regulation. And he also, unexpectedly reversed the strong dollar policy, on the assumption that if the US drove the dollar low enough, it could force the Japanese to open their markets (the Plaza accord had shown that a weaker dollar curbed US imports of Japanese goods, but did little to increase US exports to Japan. The barriers were “structural,” meaning deeply-held consumer preferences plus a host of non-tariff trade restrictions. The idea was that this would spur jobs and donations from companies that were keen to penetrate the Japanese market.
The result? Donations from Wall Street collapsed. Some donors even rescinded six figure pledges. And the business that were though to benefit from a cheaper dollar were singularly uanppreciative and did wanted more goodies before they upped their donations.
The Democratic party had not concrete accomplishments to tout, a flagging economy, and a health care fiasco. The 1994 midterm rout focused the Clinton team’s mind. As dire as the Republican revolution appeared to be, its message did not resonate with voters. So a quick reversal, including a resumption of Wall Street friendly policies, was the new order of the day.
Now things are not that bad for the Democrats…..yet. But Afghanistan looks to be a tar baby no matter what Obama does. If the economy (and we mean the economy, not the markets) does not appear to be recovering by fall next year, the Democrats could be looking at a reversal of fortunes, not as dramatic as Clinton faced, but enough to undo their Congressional majorities (I will admit to not having looked at what seats are up for grabs, incumbency is a huge factor in these calculations). And the loss of financial backing is likely to have an impact.
Put it this way: if the banksters are pulling back even with Team Obama proposing largely cosmetic reforms, can we expect the Administration to live up to its tough talk if it starts feeling pressured on other fronts?
The way they kept this under control in Australia, BTW (at least when I was there) was that NO political ads were permitted on TV. Candidates that scored above a certain threshold were given a set amount of free air time (I forget how they pulled straws to determine who got which slot). And TV ads are the big ticket item; get rid of those, and we’d see considerably less corruption in America. But we’ll never figure out how to cut that Gordian knot in America.
From the New York Times:
The Wall Street giants that received a financial lifeline from Washington may have no compunction about paying big bonuses to their dealmakers and traders. But their willingness to deliver “thank you” gifts to President Obama and the Democrats is another question altogether.
Yves here. This is actually a pretty amazing lead in. Is the New York Times finally starting to officially take up the line that Team Obama has given a sweetheart deal to the industry, despite its pretenses otherwise? Back to the story:
Mr. Obama will fly to New York on Tuesday for a lavish Democratic Party fund-raising dinner…But from the financial giants like Goldman Sachs, JPMorgan Chase and Citigroup that received federal bailout money — and whose bankers raised millions of dollars for Mr. Obama’s election — only a half-dozen or fewer are expected to attend (estimated total contribution: $91,200).
Part of the reason, several Democratic fund-raisers and executives said, is a fear of getting caught in the public rage over the perception that Wall Street titans profiting from their government bailout may use their winnings to give back to Washington in return. And the timing of the event, as the industry lobbies against proposals for tighter regulations to address the underlying causes of last year’s meltdown on Wall Street, has only added to the worry over public appearances.
Yves here. Not sure I buy that. Was it Marcy Kaptur who pointed out that not a single Wall Street CEO came to Obama’s September speech in New York one year after the Lehman meltdown? It was a pointed show of lack of respect. The “oh we have to worry about propriety so we can’t bribe you right now” is spurious. It didn’t seem to stem donations when the TARP largesse and stress test head fake was on. Back to the story:
“There is some failure in the finance industry to appreciate the level of public antagonism toward whatever Wall Street symbolizes,” said Orin Kramer, a partner in an investment firm who is a Democratic fund-raiser and one of the event’s chairmen. “But in order to save the capitalist system, the administration has to be responsive to the public mood, and that is a nuance which can get lost on Wall Street.”
Yves here. Did you catch that? Someone who is sensitive to public anger thinks that the need of the government to serve the citizenry, as opposed to the moneybags, is “nuance.” To the article:
Dr. Daniel E. Fass, another chairman of the event who lives surrounded by financiers in Greenwich, Conn., said: “The investment community feels very put-upon. They feel there is no reason why they shouldn’t earn $1 million to $200 million a year, and they don’t want to be held responsible for the global financial meltdown.” Dr. Fass added, “How much that will be reflected in their support for the president remains to be seen.”
The story does suggest that some of the fall in contribution is due to the loss of Bear and Lehman. But this factoid is telling:
So far in the current election cycle, though, Wall Street accounts for less than half as much of the Democratic Party’s fund-raising as it did in 2008: 3 percent, or about $1.5 million out of a total $53.6 million in the eight-month period, compared with about 6 percent, or $15.3 million out of $260.1 million during the last election. (Republicans relied more heavily on their party to support their presidential candidate in 2008, and the party’s Wall Street fund-raising has fallen even further.)
Wall Street is arguably doing better than the rest of the economy, and is providing lower donations. In 1994, a more dramatic fall off in contributions lead to measures to appease the financiers. Will we see a repeat?
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I just saw that Obama “may” attend the Copenhagen summit, but only if there is sufficient progress ahead of the summit. As an aide to Obama put it: ““If the kind of progress is made that warrants the presence of leaders then we will certainly consider that,” he said.”
I realise that Obama is busy with other things, including with attending “lavish” fund-raising dinners as reported by Yves, and that a list of priorities has to be made. But if the other nations in the world send their leaders to Copenhagen, even if the summit may be a failure, it would be pretty bad PR for the U.S. if Obama chose to stay home.
If he came, even in the event of an imminent failure in the negotiations, it would at least show commitment. If he was prepared to travel to Copenhagen in order for Chicago to get the Olympics, perhaps a trip back to show the need for global action on Climate Change would be a good idea.
The list of reasons given was pretty flimsy.
They were worried about the political cosmetics? Yeah, that seems to be a big concern. That’s why they decided to cool it with the big bonuses for a few years, right?
They’re angry about the adminstration’s tone lately? I doubt they’re that sensitive. I bet they do appreciate the political “nuance” of that.
The slump has lowered donations across the board? Yes, Wall Street does seem to be hurting.
Here’s my favorite:
Some former Obama fund-raisers on Wall Street have ascended to jobs in the administration, like Michael Froman, a former top Citigroup executive who is now an adviser on economics and national security.
Current Democratic fund-raisers say their 2008 take from Wall Street may also have benefited from the personal connections of the party’s chief fund-raiser that year, Philip D. Murphy, a former top executive at Goldman Sachs. (He is now ambassador to Germany).
A downside of the revolving door from the Obama point of view? It does seem like a boomerang version of the Peter Principle: You promote people in a way which is incompetent on your part, beyond the job level which would be in your best interest.
(I will admit to not having looked at what seats are up for grabs, incumbency is a huge factor in these calculations)
I’ve read a few things saying that thanks to gerrymandering, demographic changes, and other factors there are far fewer seats really in play than in 1994. According to those prognostications even a backlash against the Dems wouldn’t be likely to produce big swings.
BTW, Bob Herbert’s NYT column today is good, much stronger than Krugman’s yesterday.
Herbert’s column is good indeed.
Martin Hutchinson over at the Prudent Bear covers the same ground from a far more technical and politically conservative perspective:
http://www.prudentbear.com/index.php/thebearslairview?art_id=10298
There is growing type of non-partisan rage building that probably hasn’t been seen in the US in decades, if not longer, maybe not since Shay’s Rebellion.
Government-supported bankster looting and financial rape is now a moral issue — like taxation without representation, slavery, labor rights and civil rights.
The theoretical underpinnings that have supported it are a true fairy tale of the mind — one that only a moron or a thoroughly corrupted and soul-wasted shell of a human being could believe.
The practioners would do well to attend to their spiritual energies. The karma they are putting out will inevitably turn upon them like a pack of demons, and eat their souls like black crows eating road kill.
“Do not ye yet understand, that whatsoever entereth in at the mouth goeth into the belly, and is cast out into the draught? But those things which proceed out of the mouth come forth from the heart; and they defile the man. For out of the heart proceed evil thoughts, murders, adulteries, fornications, thefts, false witness, blasphemies: These are the things which defile a man.”
-Matthew 15 v17-20
It’s all kabuki anyway, Yves.
The Obama administration needs the American people to THINK they’re fighting the banksters and Wall Street on their behalf. The NYTimes and its Krugmanites are reinforcing the “message,” while the wink-wink goes on behind the scenes, through Treasury and WH staff.
Not much different than the Obama campaign claiming they were against NAFTA during the primaries for political purposes, but behind the scenes, reassuring Canada it was just for the election.
It’s how they roll.
Wall Street and the health insurers have gotten everything they wanted, with a few tweeks for Obama to look like a “little people” person.
But in the core policies, in the lack of substantial reforms, the Obama administration works for the Street and the corporations.
They know what side their bread is buttered on. All the rest is noise: bread and circuses.
Americans get it.
Worst case scenario is that Dems lose 15 in the House and five in the Senate. I’d bet big bucks that it winds up being substantially less than both those numbers, I’d say 11 and 3 or 4. The reasons are many, but this one is primary: if you look at the prior election cycles to 94 and ’10, you see patterns.
In 94 the R’s had also gained seats in 92 and 90. D’s gained in 06 and 08. The demographic and political trends favor the Democrats, and would need an overwhelming blow (say, 15-20% unemployment) to reverse those, not merely a punch. And there WILL be a healthcare bill. Note the stories today on polls showing support for public option has increased. That victory plus others will buoy the base in a way that isn’t captured in polls 1 year out.
My sense is that the Dems fear being identified as corruptors of government. The appearance of lower donations to the Dems is interesting and might be even more interesting if we knew the extent of contributions the the Rep’s.
There is a pattern emerging on the administration’s part, in both domestic and international relations, and it might explain why Obama looks like a guy shaking a tin cup but getting no action at the moment. This team sucks (I mean, monumentally, earth-shakingly) at negotiating–a point Yves makes well in the Sorkin review today. They gave Wall Street the store and demanded nothing, and now nothing is what they’re getting. As with Russia, Iran, the IOC, and on and on, these morons pay 100% up front and the contractor never shows. I wouldn’t mind if it weren’t my money they were forking over for nada.
As for the Wall Streeters, well they have the opposite problem. They negotiate too well, but they’re not used to doing it in front of a live studio audience. They prefer to operate in each other’s houses, at the Club, etc. Everyone is finally watching them and they don’t seem to get how much hatred they are drawing. They are waiting to donate to see who will give them the better deal, and unfortunately the sycophants in the Republican Party are desperate enough to play to this crowd, which will not serve them well next year or in 2012.
So much myopia on the part of ALL these players, and so the rage builds unchecked.
Kelly: +1. You nailed it.
I’m with LeeAnne, I keep hoping THIS change agent, unlike Clinton, will prove genuine, that there is indeed some grand “strategery” in play. Michael Moore, too, recently said as much, that Obama as a ballplayer could well be “faking right to move left.”
Obama has certainly given plenty of rope to the looney right fringe, who are quite busy hanging themselves without any outside assisance. Could all those loose coils of rope doled out to Wall Street over the people’s strenuous objections, serve a similar useful purpose—to yield ample slack sufficient to finally decapitate these malefactors of great wealth on Wall Street? Let’s keep hoping.
“Let’s keep hoping.” – Insanity defined.
Maybe Obama will grow a pair if contributions really tank and he doesn’t have to spin for contributions [responsive to the public mood]. He’d have nothing to lose and wouldn’t have to wait for a second term to live up to the promises he made for change during the campaign and the reason voters elected him. He could then provide leadership for a public option which he hasn’t done.
And he could support public funding for elections since one of his primary campaign memes was his independence from lobbyist contributions and reliance on small independent voter contributions; (we didn’t know that Rahm Emanuel was the finance sector’s largest beneficiary in his election to the House) he could reverse or clear up the ambiguity in the wording of the right to declare martial law, restore Glass-Steagall, use anti-trust laws to restore a real banking system with fiduciary responsibilities to protect the savings of workers, regulate CDOs, mark-to-market, and replace the 29-year-old Goldman Sack guy as head of the SEC. He could take off the reigns on the Justice Department and let them enforce the law rather than waste our time with a lot of window dressing -insider trading indeed.
I’m afraid that once ‘they’ catch on that the public has caught on we’ll have a war on our hands because TPTB have proven that their ruthlessness against the American people has no limits.
Therefore, Campaign Finance Reform is urgent. The organizers of the Chicago demonstration could hire a big hall with contributions from attendees to call for a non partisan group to organize a general strike set for Election Day 2010 demonstrations at the legal limits of every polling place in America to TAKE THE MONEY OUT OF ELECTIONS –in favor of PUBLICLY FUNDED ELECTIONS and/or, as suggested by Yves, a TV blackout prior to elections that has been successful in Australia.
We are so close to a dictatorship, (as Justice Sandra Day O’Connor warned us) –if its true that Obama’s just listening to his handlers and spinning [their position to the public], rather than playing chess in the political game (I’m still hoping) in spite of recent evidence that he’s pandering by criticizing private health insurers WITHOUT providing leadership in favor of a public health insurance option. Surprise me, Please.
And best wishes to all for a successful Chicago demonstration with hope that cops behave and limit themselves to their Darth Vadar costumes so appropriate for Halloween. Hey, there’s an idea -just ridicule them by wearing Darth Vader masks and carrying flowers.
Yves, I think you might have missed the “nuance.” What I take away is that Kirkpatrick gets it–and that his reference to the “nuance” of attending to the public mood was entirely ironic. This really is an interesting bit of writing, as much for its tone as its content. Granted, irony on this subject is a poor second-best to bloody outrage, but hey…
But of course the worm has turned. When you put out a “For Sale” sign as big as these filth did, any buyer’s going to know you’re in the bag. Time to switch emphasis and put the political payoffs to work where they can do you the most good.
Looks like we’ve gotten our taste of Obama at this point and it’s been found acceptably bland, clearly. No threat here. The man is simply incapable of making decisions and that’s sufficient value for what was paid. What could be better than having a moral paralytic at the helm, eh? It only hurts when you really, really want to start or escalate a war and you have publically to kick butt in order to do so. That’s annoying.
“Afghanistan looks to be a tar baby”
Yet another racist comment directed at the Obama administration
http://www.cbsnews.com/stories/2006/07/31/politics/main1851199.shtml
“Yet another racist comment directed at the Obama administration.”
And uranidiot.
Aw, did Yves manage to ruffle those highly refined, race-centered sensibilities of your’s, little fella? Here’s a cure for you: Change emetics.
I have a niggling doubt about whether you are just being niggardly with your judgement or are you actually trying to denigrate someone here?
I guess the moral of this story is: while enjoying a picnic along the Niger River, never discuss black holes.
“In 1994, a more dramatic fall off in contributions lead to measures to appease the financiers. Will we see a repeat?”
If I was a top Dem strategist, I would do the opposite, that is tighten the screws on them so bad it would hurt aplenty. After all, does anyone seriously think that, in the present context, the Republicans could stage a come back even if they received gobs of money from Wall Street? Just check their poll numbers; lowest on record, and for good reason.
It would also teach a lesson to these supremely arrogant bastards that are the banksters.
Once you get what you need and more, and you have your guys installed in all the key positions, why bother to go to fundraisers?
It’s a win-win – the Administration looks “independent”, you let the Administration know who holds the purse strings (by the way, don’t even think about a 2nd stimulus) and if you really need their support again, who has more money to throw at the problem?
‘…Someone who is sensitive to public anger thinks that the need of the government to serve the citizenry, as opposed to the moneybags, is “nuance.” ‘
In fact the article does not go nearly so far. There is no presumption of any “need to serve the citizenry” at all. The only given “need” is to serve and save capitalism. The nuance is merely ‘responsiveness to public mood’—the appearance (only) of giving a damn, without the slightest pretense of acting on it—“we feel your pain” nothing more. And even so the banksters “feel put upon”?
It reminds me of John Malkovich’s icy line in ‘Dangerous Liasons’, “It is entirely beyond my control.” Does anyone know when hunting season opens in The Hamptons?
I don’t, but it wouldn’t surprise me if they’d rather not show up at publicly announced events where they may be photographed or confronted with demonstrators’ signs.
It’s interesting that a recent New York Times social page photo of a formal Carnegie Hall event shows a group of three with a caption including Sandy Weill that shows only the back of his head.
Why would the banks bother bribing anybody if they can get their way for free by simply threatening that the entire system will be destroyed if the government doesn’t acquiesce to their demands?
I think there’s some truth to the “sensitivity” part, though. Earlier this year, there was outrage (which began, I believe, in the NYTimes) that the banks were basically using some of their bailout money for lobbying purposes. You can see how that would make them shy about upping the contributions.
I’m also curious as who originated this story–the odds that some reporter figured this pattern out all on his own and then wrote a story about it are, imo, nil.