Memo to Congress.
From: Larry Summers
Re: We fixed the Economy
Mr. Summers does not lack in confidence, yet this spin control is important.
We have traveled a remarkable distance over the past six months in pulling our economy
back from the brink of economic catastrophe. The wide-ranging efforts taken by the
Obama Administration, working closely with the 111th Congress – implementing the
Recovery Act, restoring confidence in the financial system, providing assistance for
responsible homeowners and pressing to get credit flowing to small businesses – have
helped pull the economy out of a nosedive, and have put us on a path toward a sustained
economic recovery. While we still have a long way go, we are far closer to that recovery
today than we were in January.
Where We Were
What We Have Done
Where We Are Now
Showing posts with label Summers. Show all posts
Showing posts with label Summers. Show all posts
Thursday, August 6, 2009
Saturday, June 13, 2009
Summers Calls Obama Defender of Free Markets
President Barack Obama's chief economist on Friday defended White House economic policies against criticism that they amounted to "a kind of back-door socialism."
Utter nonsense. The same geniuses, or of the same political party, criticized FDR similarly, and look how far FDR's socialism went: it left capitalism vibrant, so that the Republicans could destroy it. See Reagan, Ronald; Bush, George W.
House Minority Whip Eric Cantor of Virginia, the chamber's second-ranking Republican, on Friday likened the president's economic policies to those of Russian Prime Minister Vladimir Putin.
"It is stunning to see someone in the position of Larry Summers having to defend the president's commitment to free-market capitalism," Mr. Cantor said in an interview. "By giving this speech, this administration has signaled perhaps we are losing that America we all know."
Cantor is an utter idiot. Putin isn't a socialist; Russia's communism is done. Putin administers a sort of state capitalism, or corporatism. Cantor is simply using the name Putin to elicit a particular response. Schmuck.
Utter nonsense. The same geniuses, or of the same political party, criticized FDR similarly, and look how far FDR's socialism went: it left capitalism vibrant, so that the Republicans could destroy it. See Reagan, Ronald; Bush, George W.
House Minority Whip Eric Cantor of Virginia, the chamber's second-ranking Republican, on Friday likened the president's economic policies to those of Russian Prime Minister Vladimir Putin.
"It is stunning to see someone in the position of Larry Summers having to defend the president's commitment to free-market capitalism," Mr. Cantor said in an interview. "By giving this speech, this administration has signaled perhaps we are losing that America we all know."
Cantor is an utter idiot. Putin isn't a socialist; Russia's communism is done. Putin administers a sort of state capitalism, or corporatism. Cantor is simply using the name Putin to elicit a particular response. Schmuck.
Monday, June 1, 2009
Brian Deese, who interrupted his law school career, is the little-seen force behind the revamping of the American auto industry.
It is not every 31-year-old who, in a first government job, finds himself dismantling General Motors and rewriting the rules of American capitalism.
But that, in short, is the job description for Brian Deese, a not-quite graduate of Yale Law School who had never set foot in an automotive assembly plant until he took on his nearly unseen role in remaking the American automotive industry.
“Brian grasps both the economics and the politics about as quickly as I’ve seen anyone do this,” said Lawrence H. Summers, the head of the National Economic Council who is not known for being patient whenever he believes an analysis is sub-par — or disagrees with his own. “And there he was in the Roosevelt Room, speaking up vigorously to make the point that the costs we were going to incur giving Fiat a chance were no greater than some of the hidden costs of liquidation.”
That is very high praise from Summers.
Mr. Deese was not the only one favoring the Fiat deal, but his lengthy memorandum on how liquidation would increase Medicaid costs, unemployment insurance and municipal bankruptcies ended the debate.
Sharp.
In fact, from before Inauguration Day, few in Mr. Obama’s circle saw any other choice. Every time Mr. Deese ran the numbers on G.M. and Chrysler, he came back with the now-obvious conclusion that neither was a viable business, and that their plans to revive themselves did not address the erosion of their revenues. But it took the support of Mr. Rattner and Ron Bloom, senior advisers to the task force charged with restructuring the automobile industry, to help turn Mr. Deese’s positions into policy.
How dense, and how bad their business acumen, that the executives could not see that?
It is not every 31-year-old who, in a first government job, finds himself dismantling General Motors and rewriting the rules of American capitalism.
But that, in short, is the job description for Brian Deese, a not-quite graduate of Yale Law School who had never set foot in an automotive assembly plant until he took on his nearly unseen role in remaking the American automotive industry.
“Brian grasps both the economics and the politics about as quickly as I’ve seen anyone do this,” said Lawrence H. Summers, the head of the National Economic Council who is not known for being patient whenever he believes an analysis is sub-par — or disagrees with his own. “And there he was in the Roosevelt Room, speaking up vigorously to make the point that the costs we were going to incur giving Fiat a chance were no greater than some of the hidden costs of liquidation.”
That is very high praise from Summers.
Mr. Deese was not the only one favoring the Fiat deal, but his lengthy memorandum on how liquidation would increase Medicaid costs, unemployment insurance and municipal bankruptcies ended the debate.
Sharp.
In fact, from before Inauguration Day, few in Mr. Obama’s circle saw any other choice. Every time Mr. Deese ran the numbers on G.M. and Chrysler, he came back with the now-obvious conclusion that neither was a viable business, and that their plans to revive themselves did not address the erosion of their revenues. But it took the support of Mr. Rattner and Ron Bloom, senior advisers to the task force charged with restructuring the automobile industry, to help turn Mr. Deese’s positions into policy.
How dense, and how bad their business acumen, that the executives could not see that?
Monday, March 23, 2009
Inside Obama’s Economic Brain Trust
What greeted Geithner in the capital was a full-blown firestorm. Republicans were howling and screeching, calling for his head on a pike. Some Democrats privately agreed. On Wall Street, meanwhile, where Geithner’s stock has been falling precipitously for weeks, a prominent Democratic banker (and Obama backer) told me, “It’s not that everyone here thinks he should be fired. It’s just that there’s no one who would stand up right now and publicly throw their support behind him.”
He is the eye of the hurricane.
A budget session in the White House Roosevelt Room in February. From left, Gene Sperling confers with OMB director Peter Orszag as Tim Geithner talks with Larry Summers.
That Obama would defend Geithner on AIG comes as no great shock. According to the president’s chief of staff, Rahm Emanuel, Obama regards the bonus imbroglio as a “distraction” from more urgent economic priorities; his goal is to move past it and allow Geithner to get back to the business of rescuing the financial system. Yet AIG will not be so easily brushed aside, for it has brought to a boil the simmering doubts about not just Geithner but also his partner Larry Summers, director of Obama’s National Economic Council, and the economic approach they are fashioning and advancing for the administration.
It is a distraction, but it has traction, and has become an important issue. Of course, their honeymoon lasted about a week, if that long. Republicans can't figure out what to do except howl, and the IGA imbroglio has given them something specific to howl about.
When Obama appointed Geithner and Summers back in November, the reaction in Washington and on Wall Street was the same: first relief and then elation. (The day the news of Geithner’s selection leaked, the Dow rose 6.5 percent.) They were brilliant, experienced, crisis-tested, market-minded but progressive, a kind of economic-policy dream team. Since then, they have worked side by side along with Fed chair Ben Bernanke to quell an economic crisis as monstrous as any since the Great Depression—while formulating an economic agenda as ambitious as any since FDR’s. They’ve unveiled big plans, talked big talk, and crafted and shepherded into law the biggest fiscal-stimulus package in American history.
The 'market' wanted Geithner, approved of him, and a 6.5% rise is substantial. But the market is schizophrenic, and its attention span is exceedingly short.
But Obamanomics represents something even bigger than all that. At a moment when the fundamental precepts of market capitalism and government’s relationship to the economy are up for grabs, the Obamans are attempting nothing less than a redefinition of progressivism, which could alter the terms of political engagement and the ideological balance of power for decades to come. With their budget, they have laid out a vision that, as former Labor secretary Robert Reich puts it, “reverses and repudiates the economic philosophy that has dominated America since 1981.” Obamanomics isn’t merely the end of Reaganomics, in other words. It’s the end of Rubinomics, too.
Good riddance to both.
An agenda this transformative is bound to stir up criticism, and so it has—from the left and the right, Wall Street and Main Street, arch-Establishmentarians and hot-eyed populists in roughly equal measure. The complaints of these factions vary wildly, but they share a point of agreement: that the administration so far has badly mishandled the banking crisis; that it’s dithered, dawdled, and dinked around instead of delivering bold, decisive action. For Obama, confronting this issue poses a vexing dilemma. Saving the banks is the sine qua non for the country’s emergence from its ever-deepening miasma, but in doing so, Obama risks incurring a tsunami of bailout rage. If, on the other hand, he appeals too much to populism, he risks driving elites away. Either outcome could deny him the support he needs for the rest of his agenda. Getting the economics right may be devilishly difficult—but the politics are even trickier, and just as crucial.
Everybody hates it, so it must be good. And it is. It signals a new age, and it will be very difficult to get done. But it is important to get it done. The politics will be difficult. Yet I have faith in this President.
By the time you read this, in all likelihood, Geithner will finally have unveiled his plan, developed with Summers, for rescuing the banks. The stakes could not be higher. To no small extent, Obama is betting his presidency on their ability to help him pull this off. Their skills, brains, and dedication are not in question; for all the brickbats being hurled their way, they are laboring tirelessly, even heroically, against a nightmare not of their making. The question is, will that be enough?
Throughout his career—from becoming, at 28, one of the youngest tenured professors in Harvard’s history to his brief and inglorious tenure as the university’s president—much has been made of Summers’s abrasiveness and regard for his own candlepower. “Larry Summers is to humility what Madonna is to chastity,” The Wall Street Journal editorial-page editor Paul Gigot once wrote. But unlike most intellectual bulldozers, Summers enjoys people who fight back, even invites them to. He also has a fine sense of humor about himself. After reading Gigot’s gibe, Summers told his then-wife, “Well, it’s not as bad as it could have been: He could have said that I’m to chastity what Madonna is to humility."
Emphasis added, joke enjoyed.
Under the topic of could-have-been, file Geithner's selection as Treasury Secretary, rather than Summers: The decision would prove fateful. Whatever difficulties Summers might have encountered during the confirmation process, it’s hard to believe they would have been more acute—or lastingly debilitating—than the controversy that arose over Geithner’s taxes. To start with, Tom Daschle would likely have been able to survive his own l’affaire IRS. And perhaps more consequentially, the tax-compliance flyspecking that has made filling the senior posts under Geithner so difficult might have been avoided.
The passage of the stimulus package was, no doubt, a significant victory for Obama, Summers, and the rest of the economic team. But for Geithner, the triumph coincided with the start of what would be for him a long and brutal stretch. For on the same day that the Senate passed its version of the stimulus, thus essentially guaranteeing its enactment, Geithner delivered his maiden speech on the Obama plan to save the banks.
“Tim and Barack might have been able to get away with ‘Trust me on the details’—except that they were following Paulson, who asked to be trusted so many times and then changed directions that no one was going to trust any Treasury secretary on the details,” remarks a senior executive at one of Wall Street’s biggest banks. “And then here comes Tim and says, ‘Trust me on the details.’ Oy vey.”
What had happened was that Geithner, after weeks of working on the plan, changed his mind late in the game and decided to pursue a different path. Without time to craft fully the new strategy, he concluded that vagueness was preferable to providing details that might have to be altered later. One problem, though: Apparently no one told Obama.
Apparently? What kind of stuff is that? And changing his mind at the last minute? Improvising is good in jazz and football running backs and point guards, but not in steering the federal government during a financial disaster. Oy vey.
To some in the White House, the sight of the financial world turning hard against Geithner is curious, even baffling. What the Obamans thought they were getting in him was Wall Street’s guy. “They don’t get it,” says one name-brand Democratic banker. “Geithner was a $500,000-a-year guy. He was the regulator. People knew him, liked him fine, but he was never a member of the club.”
I guess he means only 500 thoussand. Pity that.
A longtime Geithner ally in Washington comes to a different conclusion. “A lot of the pushback he’s getting from Wall Street is about their lack of self-awareness about how the world has changed, how they’re not the Masters of the Universe anymore,” this person argues. “They feel marginalized and put-upon by the administration’s rhetoric about the greedy bankers. They are way behind the curve about where the public is and how much pressure the administration is feeling. They don’t like what the new environment means for how they run their business. They see their taxes going up and their compensation going down. And what they don’t do is go to the New York Times and say, ‘My feelings are hurt. I don’t like what the new president is saying about our character and our competence.’ What they say is, ‘These guys are incompetent, we need a real policy, the Treasury secretary has got an unsteady hand—he’s not up to the job.’ They’re thinking one thing and saying something quite different.”
It sure depends how you look at it; two people can arrive at two different conclusions, depending on their persepctive.
And, where is Paul Volcker in all of this?
In the worlds of finance and business, few figures are held in higher esteem than the towering, stoop-shouldered, marble-mouthed Volcker. So it has hardly gone unnoticed that he has lately seemed, ahem, less than thrilled with Team Obama.
I've noted his absence.
He has privately complained that Summers has frozen him out of the policy-making process. He has publicly criticized the sluglike pace of filling top jobs at Treasury as “shameful.” With the White House meeting, Obama had a chance to make Volcker happy—and in the process use him as a piece of photo-op arm candy, sending the message that the chairman remains standing, literally and figuratively, beside him.Was Volcker placated? Maybe only momentarily. “He wants to have a real role,” says someone who knows him. “If they’re gonna call him an Obama adviser, he wants to really advise. He has no interest in just being window dressing.”
Ah, office politics, bruised egos, intrigue.
Even (or especially) absent details, nobody has the faintest clue whether the plan will work. But everyone believes that, even if it does, the cost will be stratospherically high—likely upwards of $1 trillion, comprised of the $250 billion still in the kitty from Paulson’s original tarp program plus the $750 billion that the Obama budget warned Congress might be needed. The problem, politically speaking, is that the public appetite for ponying up for further bailouts is small and shrinking by the day, thanks in no small part to the depredations undertaken by AIG.
The AIG imbroglio cost Barack Obama a lot of political capital. A lot. The political will to undertake significant efforts to solve the financial crisis is dwindling, with the Republicans working to whittle it further.
The only way that the electorate is going to sign on to the level of spending necessary to keep the financial system from imploding is if there is some tangible upside for the taxpayer—as opposed to the current bailout paradigm, which Krugman refers to as “lemon socialism: Banks get the upside, but taxpayers bear the risks.”
Krugman doesn't like a lot of things. That doesn't mean he's wrong, but he is a sour puss.
There are those who believe that the administration grasps the point perfectly well. That nationalization is where it’s headed, slowly but surely. That the stress tests are really just a backdoor way into temporary government ownership of the current zombie banks—a means of providing a sense of order, consistency, and due process necessary to make nationalization seem an empirically based act of last resort.
Some have forecast nationalization, including Dr. Doom.
“All I can tell you,” says one administration official, “is that Larry seems quite happy with this part of the policy portfolio being known as the Geithner Plan.”
More office intrigue.
The truth, in the end, is that whatever emerges will be perceived as the Obama plan. And the president is apparently deeply uncomfortable with nationalization.
Not a socialist? How about that.
Two months into the Obama era, however, it’s hard to detect many traces of the Rubin doctrine in what the new president and his people have done or are planning to do in the future. The administration proposes to run a $1.17 trillion deficit in 2010. It intends to reregulate the financial industry. The reduction of income inequality is at the core of its tax and spending proposals. Its budget plan reflects “the largest commitment [to public investment] in 40 years,” notes Bob Reich. And it imagines a level of direct government involvement in the market (and particularly in the banking sector, nationalization or no) that would have Rubin spinning in his grave—if he weren’t still kicking, that is.
A variation on Ralph Kiner's phrase.
The balancing act that Obama must therefore pull off is a hell of a party trick. He must court the elites without pissing off the masses and soothe and provide catharsis for the masses without alienating the elites. His political advisers, seeing his poll numbers beginning to slip, are applying their war paint and preparing to do what they do best: pick a fight with the Republicans. (Rush Limbaugh, anyone?) But however tempting this might be, Obama would do well to rein them in. Not because there’s any inherent virtue in bi-partisanship or kowtowing to Republicans. But because picking fights during a national crisis looks small, unserious, and faintly oblivious to the severity and significance of what’s occurring around us.
He is the eye of the hurricane.
A budget session in the White House Roosevelt Room in February. From left, Gene Sperling confers with OMB director Peter Orszag as Tim Geithner talks with Larry Summers.
That Obama would defend Geithner on AIG comes as no great shock. According to the president’s chief of staff, Rahm Emanuel, Obama regards the bonus imbroglio as a “distraction” from more urgent economic priorities; his goal is to move past it and allow Geithner to get back to the business of rescuing the financial system. Yet AIG will not be so easily brushed aside, for it has brought to a boil the simmering doubts about not just Geithner but also his partner Larry Summers, director of Obama’s National Economic Council, and the economic approach they are fashioning and advancing for the administration.
It is a distraction, but it has traction, and has become an important issue. Of course, their honeymoon lasted about a week, if that long. Republicans can't figure out what to do except howl, and the IGA imbroglio has given them something specific to howl about.
When Obama appointed Geithner and Summers back in November, the reaction in Washington and on Wall Street was the same: first relief and then elation. (The day the news of Geithner’s selection leaked, the Dow rose 6.5 percent.) They were brilliant, experienced, crisis-tested, market-minded but progressive, a kind of economic-policy dream team. Since then, they have worked side by side along with Fed chair Ben Bernanke to quell an economic crisis as monstrous as any since the Great Depression—while formulating an economic agenda as ambitious as any since FDR’s. They’ve unveiled big plans, talked big talk, and crafted and shepherded into law the biggest fiscal-stimulus package in American history.
The 'market' wanted Geithner, approved of him, and a 6.5% rise is substantial. But the market is schizophrenic, and its attention span is exceedingly short.
But Obamanomics represents something even bigger than all that. At a moment when the fundamental precepts of market capitalism and government’s relationship to the economy are up for grabs, the Obamans are attempting nothing less than a redefinition of progressivism, which could alter the terms of political engagement and the ideological balance of power for decades to come. With their budget, they have laid out a vision that, as former Labor secretary Robert Reich puts it, “reverses and repudiates the economic philosophy that has dominated America since 1981.” Obamanomics isn’t merely the end of Reaganomics, in other words. It’s the end of Rubinomics, too.
Good riddance to both.
An agenda this transformative is bound to stir up criticism, and so it has—from the left and the right, Wall Street and Main Street, arch-Establishmentarians and hot-eyed populists in roughly equal measure. The complaints of these factions vary wildly, but they share a point of agreement: that the administration so far has badly mishandled the banking crisis; that it’s dithered, dawdled, and dinked around instead of delivering bold, decisive action. For Obama, confronting this issue poses a vexing dilemma. Saving the banks is the sine qua non for the country’s emergence from its ever-deepening miasma, but in doing so, Obama risks incurring a tsunami of bailout rage. If, on the other hand, he appeals too much to populism, he risks driving elites away. Either outcome could deny him the support he needs for the rest of his agenda. Getting the economics right may be devilishly difficult—but the politics are even trickier, and just as crucial.
Everybody hates it, so it must be good. And it is. It signals a new age, and it will be very difficult to get done. But it is important to get it done. The politics will be difficult. Yet I have faith in this President.
By the time you read this, in all likelihood, Geithner will finally have unveiled his plan, developed with Summers, for rescuing the banks. The stakes could not be higher. To no small extent, Obama is betting his presidency on their ability to help him pull this off. Their skills, brains, and dedication are not in question; for all the brickbats being hurled their way, they are laboring tirelessly, even heroically, against a nightmare not of their making. The question is, will that be enough?
Throughout his career—from becoming, at 28, one of the youngest tenured professors in Harvard’s history to his brief and inglorious tenure as the university’s president—much has been made of Summers’s abrasiveness and regard for his own candlepower. “Larry Summers is to humility what Madonna is to chastity,” The Wall Street Journal editorial-page editor Paul Gigot once wrote. But unlike most intellectual bulldozers, Summers enjoys people who fight back, even invites them to. He also has a fine sense of humor about himself. After reading Gigot’s gibe, Summers told his then-wife, “Well, it’s not as bad as it could have been: He could have said that I’m to chastity what Madonna is to humility."
Emphasis added, joke enjoyed.
Under the topic of could-have-been, file Geithner's selection as Treasury Secretary, rather than Summers: The decision would prove fateful. Whatever difficulties Summers might have encountered during the confirmation process, it’s hard to believe they would have been more acute—or lastingly debilitating—than the controversy that arose over Geithner’s taxes. To start with, Tom Daschle would likely have been able to survive his own l’affaire IRS. And perhaps more consequentially, the tax-compliance flyspecking that has made filling the senior posts under Geithner so difficult might have been avoided.
The passage of the stimulus package was, no doubt, a significant victory for Obama, Summers, and the rest of the economic team. But for Geithner, the triumph coincided with the start of what would be for him a long and brutal stretch. For on the same day that the Senate passed its version of the stimulus, thus essentially guaranteeing its enactment, Geithner delivered his maiden speech on the Obama plan to save the banks.
“Tim and Barack might have been able to get away with ‘Trust me on the details’—except that they were following Paulson, who asked to be trusted so many times and then changed directions that no one was going to trust any Treasury secretary on the details,” remarks a senior executive at one of Wall Street’s biggest banks. “And then here comes Tim and says, ‘Trust me on the details.’ Oy vey.”
What had happened was that Geithner, after weeks of working on the plan, changed his mind late in the game and decided to pursue a different path. Without time to craft fully the new strategy, he concluded that vagueness was preferable to providing details that might have to be altered later. One problem, though: Apparently no one told Obama.
Apparently? What kind of stuff is that? And changing his mind at the last minute? Improvising is good in jazz and football running backs and point guards, but not in steering the federal government during a financial disaster. Oy vey.
To some in the White House, the sight of the financial world turning hard against Geithner is curious, even baffling. What the Obamans thought they were getting in him was Wall Street’s guy. “They don’t get it,” says one name-brand Democratic banker. “Geithner was a $500,000-a-year guy. He was the regulator. People knew him, liked him fine, but he was never a member of the club.”
I guess he means only 500 thoussand. Pity that.
A longtime Geithner ally in Washington comes to a different conclusion. “A lot of the pushback he’s getting from Wall Street is about their lack of self-awareness about how the world has changed, how they’re not the Masters of the Universe anymore,” this person argues. “They feel marginalized and put-upon by the administration’s rhetoric about the greedy bankers. They are way behind the curve about where the public is and how much pressure the administration is feeling. They don’t like what the new environment means for how they run their business. They see their taxes going up and their compensation going down. And what they don’t do is go to the New York Times and say, ‘My feelings are hurt. I don’t like what the new president is saying about our character and our competence.’ What they say is, ‘These guys are incompetent, we need a real policy, the Treasury secretary has got an unsteady hand—he’s not up to the job.’ They’re thinking one thing and saying something quite different.”
It sure depends how you look at it; two people can arrive at two different conclusions, depending on their persepctive.
And, where is Paul Volcker in all of this?
In the worlds of finance and business, few figures are held in higher esteem than the towering, stoop-shouldered, marble-mouthed Volcker. So it has hardly gone unnoticed that he has lately seemed, ahem, less than thrilled with Team Obama.
I've noted his absence.
He has privately complained that Summers has frozen him out of the policy-making process. He has publicly criticized the sluglike pace of filling top jobs at Treasury as “shameful.” With the White House meeting, Obama had a chance to make Volcker happy—and in the process use him as a piece of photo-op arm candy, sending the message that the chairman remains standing, literally and figuratively, beside him.Was Volcker placated? Maybe only momentarily. “He wants to have a real role,” says someone who knows him. “If they’re gonna call him an Obama adviser, he wants to really advise. He has no interest in just being window dressing.”
Ah, office politics, bruised egos, intrigue.
Even (or especially) absent details, nobody has the faintest clue whether the plan will work. But everyone believes that, even if it does, the cost will be stratospherically high—likely upwards of $1 trillion, comprised of the $250 billion still in the kitty from Paulson’s original tarp program plus the $750 billion that the Obama budget warned Congress might be needed. The problem, politically speaking, is that the public appetite for ponying up for further bailouts is small and shrinking by the day, thanks in no small part to the depredations undertaken by AIG.
The AIG imbroglio cost Barack Obama a lot of political capital. A lot. The political will to undertake significant efforts to solve the financial crisis is dwindling, with the Republicans working to whittle it further.
The only way that the electorate is going to sign on to the level of spending necessary to keep the financial system from imploding is if there is some tangible upside for the taxpayer—as opposed to the current bailout paradigm, which Krugman refers to as “lemon socialism: Banks get the upside, but taxpayers bear the risks.”
Krugman doesn't like a lot of things. That doesn't mean he's wrong, but he is a sour puss.
There are those who believe that the administration grasps the point perfectly well. That nationalization is where it’s headed, slowly but surely. That the stress tests are really just a backdoor way into temporary government ownership of the current zombie banks—a means of providing a sense of order, consistency, and due process necessary to make nationalization seem an empirically based act of last resort.
Some have forecast nationalization, including Dr. Doom.
“All I can tell you,” says one administration official, “is that Larry seems quite happy with this part of the policy portfolio being known as the Geithner Plan.”
More office intrigue.
The truth, in the end, is that whatever emerges will be perceived as the Obama plan. And the president is apparently deeply uncomfortable with nationalization.
Not a socialist? How about that.
Two months into the Obama era, however, it’s hard to detect many traces of the Rubin doctrine in what the new president and his people have done or are planning to do in the future. The administration proposes to run a $1.17 trillion deficit in 2010. It intends to reregulate the financial industry. The reduction of income inequality is at the core of its tax and spending proposals. Its budget plan reflects “the largest commitment [to public investment] in 40 years,” notes Bob Reich. And it imagines a level of direct government involvement in the market (and particularly in the banking sector, nationalization or no) that would have Rubin spinning in his grave—if he weren’t still kicking, that is.
A variation on Ralph Kiner's phrase.
The balancing act that Obama must therefore pull off is a hell of a party trick. He must court the elites without pissing off the masses and soothe and provide catharsis for the masses without alienating the elites. His political advisers, seeing his poll numbers beginning to slip, are applying their war paint and preparing to do what they do best: pick a fight with the Republicans. (Rush Limbaugh, anyone?) But however tempting this might be, Obama would do well to rein them in. Not because there’s any inherent virtue in bi-partisanship or kowtowing to Republicans. But because picking fights during a national crisis looks small, unserious, and faintly oblivious to the severity and significance of what’s occurring around us.
Tuesday, January 6, 2009
Mr. Rajan Was Unpopular (But Prescient) at Greenspan Party
To outline his fears about the U.S. economy, Raghuram Rajan picked a tough crowd. It was August 2005, at an annual gathering of high-powered economists at Jackson Hole, Wyo. -- and that year they were honoring Alan Greenspan. Mr. Greenspan, a giant of 20th-century economic policy, was about to retire as Federal Reserve chairman after presiding over a historic period of economic growth.
In 2005 Greenspan was still deified. His record was considered stellar.
Mr. Rajan, a professor at the University of Chicago's Booth Graduate School of Business, chose that moment to deliver a paper called "Has Financial Development Made the World Riskier?"
To oppose Greenspan was to defy orthodoxy, an orthodoxy that seemed unassailable because of the track record of an uninterrupted bull market and endless prosperity.
Today, however, few are dismissing his ideas. The financial crisis has savaged the reputation of Mr. Greenspan and others now seen as having turned a blind eye toward excessive risk-taking.
And Greenspan can not believe he is being attacked; he calls criticisms unfair, and insists no one could have foreseen the financial tsunami that had caused such calamity.
Rajan got it essentially right: Incentives were horribly skewed in the financial sector, with workers reaping rich rewards for making money, but being only lightly penalized for losses ... which encouraged financial firms to invest in complex products with potentially big payoffs, which could on occasion fail spectacularly.
He pointed to "credit-default swaps," which act as insurance against bond defaults. He said insurers and others were generating big returns selling these swaps with the appearance of taking on little risk, even though the pain could be immense if defaults actually occurred.
Mr. Rajan also argued that because banks were holding a portion of the credit securities they created on their books, if those securities ran into trouble, the banking system itself would be at risk. Banks would lose confidence in one another, he said: "The interbank market could freeze up, and one could well have a full-blown financial crisis."
It all came to pass. What is rather worrisome is how one critic treated Rajan's analysis: Former Treasury Secretary Lawrence Summers, famous among economists for his blistering attacks, told the audience he found "the basic, slightly lead-eyed premise of [Mr. Rajan's] paper to be misguided."
Summers is going to be in charge of the Obama administration's National Economic Council. I can only hope he has learned something from this misguided criticism.
The Jackson Hole contretemps followed by a few months another set of attacks on Mr. Rajan for a study he co-wrote at the IMF that concluded foreign aid didn't help developing countries grow. Mr. Rajan says the twin controversies didn't deter him. At the IMF, he pushed the research department to focus on financial-sector issues, and continued to sound alarm bells about financial-market risks.
By summer 2007, as the crisis began unfolding in earnest, Fed bank presidents Janet Yellen and Gary Stern were citing Mr. Rajan's critiques in their speeches.
Once a pariah, he became an expert others cited. Witness:
Mr. Rajan also urges other safeguards. Along with Chicago colleagues Anil Kashyap and Harvard economist Jeremy Stein, he's come up with a plan to create a form of financial-catastrophe insurance that firms would buy into.
Who would write the insurance? And could that entity withstand a calamity?
When he presented the insurance idea at last year's Jackson Hole confab, the reaction was different than back in 2005. Finnish central-bank governor Erkki Liikanen, recalling the weaknesses Mr. Rajan had spotted in the system back then, said: "I don't dare criticize you. That is all."
In 2005 Greenspan was still deified. His record was considered stellar.
Mr. Rajan, a professor at the University of Chicago's Booth Graduate School of Business, chose that moment to deliver a paper called "Has Financial Development Made the World Riskier?"
His answer: Yes.
Mr. Rajan quickly came under attack as an antimarket Luddite, wistful for old days of regulation.To oppose Greenspan was to defy orthodoxy, an orthodoxy that seemed unassailable because of the track record of an uninterrupted bull market and endless prosperity.
Today, however, few are dismissing his ideas. The financial crisis has savaged the reputation of Mr. Greenspan and others now seen as having turned a blind eye toward excessive risk-taking.
And Greenspan can not believe he is being attacked; he calls criticisms unfair, and insists no one could have foreseen the financial tsunami that had caused such calamity.
Rajan got it essentially right: Incentives were horribly skewed in the financial sector, with workers reaping rich rewards for making money, but being only lightly penalized for losses ... which encouraged financial firms to invest in complex products with potentially big payoffs, which could on occasion fail spectacularly.
He pointed to "credit-default swaps," which act as insurance against bond defaults. He said insurers and others were generating big returns selling these swaps with the appearance of taking on little risk, even though the pain could be immense if defaults actually occurred.
Mr. Rajan also argued that because banks were holding a portion of the credit securities they created on their books, if those securities ran into trouble, the banking system itself would be at risk. Banks would lose confidence in one another, he said: "The interbank market could freeze up, and one could well have a full-blown financial crisis."
It all came to pass. What is rather worrisome is how one critic treated Rajan's analysis: Former Treasury Secretary Lawrence Summers, famous among economists for his blistering attacks, told the audience he found "the basic, slightly lead-eyed premise of [Mr. Rajan's] paper to be misguided."
Summers is going to be in charge of the Obama administration's National Economic Council. I can only hope he has learned something from this misguided criticism.
The Jackson Hole contretemps followed by a few months another set of attacks on Mr. Rajan for a study he co-wrote at the IMF that concluded foreign aid didn't help developing countries grow. Mr. Rajan says the twin controversies didn't deter him. At the IMF, he pushed the research department to focus on financial-sector issues, and continued to sound alarm bells about financial-market risks.
By summer 2007, as the crisis began unfolding in earnest, Fed bank presidents Janet Yellen and Gary Stern were citing Mr. Rajan's critiques in their speeches.
Once a pariah, he became an expert others cited. Witness:
Mr. Rajan also urges other safeguards. Along with Chicago colleagues Anil Kashyap and Harvard economist Jeremy Stein, he's come up with a plan to create a form of financial-catastrophe insurance that firms would buy into.
Who would write the insurance? And could that entity withstand a calamity?
When he presented the insurance idea at last year's Jackson Hole confab, the reaction was different than back in 2005. Finnish central-bank governor Erkki Liikanen, recalling the weaknesses Mr. Rajan had spotted in the system back then, said: "I don't dare criticize you. That is all."
Tuesday, November 25, 2008
The Closest of Frenemies
Were the idea, having coming this far and become this public, to fall apart now, the ensuing humiliation would be grievous and mutual for Obama and Clinton. Too grievous and too mutual, that is, for them to let it happen.
That was exactly what I felt soon after word was leaked: it would not have been made public if there were doubt on either side. And every pundit has an opinion, and confidence therein, as to what the appointment means: a disaster, a stroke of genius, little in between.
But what strikes me as most interesting about it—along with the other appointments Obama has made so far—is what it suggests about the president-elect, from his conception of his embryonic administration to the size and contours of his ego.
It strikes me that most commentators are so sure of their opinions, that they are not taking time to reflect. This commentator does some reflecting. After outlining the commentary of Tom Friedman, David Ignatius and David Broder (many at MSNBC and CNN quote Friedman as if he were a sage, rather than a columnist), he posits the strengths of the appointment.
But for Obama and his inner circle—notably Rahm Emanuel, his new chief of staff, whose fingerprints are all over the Clinton gambit—Hillary brings an array of strengths to the table, and many of what critics see as her problematic qualities can be viewed instead as assets. Her existing relationships with world leaders and her global star power would allow her to walk into foreign capitals and deal with the president or prime minister on level footing. And in the face of a cratering economy likely to consume the first year (or more) of Obama’s term, handing off the foreign-policy legwork to a savvy, tough, high-profile surrogate with roundly acknowledged expertise on the relevant issues holds no small appeal.
And more:
Then there are the more subtle advantages to picking Hillary. Foreign policy is prone to internecine conflict in any administration, with the secretaries of State and Defense, the national-security adviser, and often the vice-president all jockeying for position. And Obama’s regime—with Joe Biden in the building and Robert Gates likely to remain atop the Pentagon—will be no exception. But Clinton is much closer to Biden than most people realize; that campaign gaffe of his about her making a better V.P. than him was more like a Freudian slip. And Gates, like many Republicans, is said to respect Hillary immensely; indeed, no Democrat is regarded more highly by the opposition and the generals.
Finally, there’s the Machiavellian angle: Obama playing the prince by pulling the old king and queen close. As Dee Dee Myers observed, her former boss is sure to cause Obama heartburn whether he is in the huddle or on the sidelines, musing about the new president’s (inevitable) missteps. “The question is not how to keep him at arm’s length,” she blogged, “but rather how best to harness his prodigious talent in service of shared goals, rather than political mischief.” The odds of doing that—and, incidentally, banishing any stray fantasies of a nomination challenge in 2012 from HRC’s mind—go up by putting his wife on Team Obama.
Bubba won't be disrespecting the Obama Administration too much if Hillary is part of it. Very good point. One Chris Matthews is too hysterical to consider, let alone think of.
The obvious question is why Hillary would do it. What’s she thinking? What’s her game? No doubt part of the reason her people began leaking word that she’s not certain she wants the gig was to cushion the blow in case the Bubba vet turned ugly.
Spin is a Clinton game, and they play it well.
Assuming that Clinton and Obama get to yes, Eric Holder is a go for attorney general, and the Gates assumption holds, the upper echelon of Obama’s Cabinet will be nearly full: only one of the big four, Treasury, remains an unleaked mystery. The Clinton choice matters here. With Obama already catching flak from his base for being too Clinton-centric, Hillary at State probably reduces Larry Summers’s chances of winding up at Treasury. The more likely pick seems to be Jon Corzine, whose stock has risen despite some mildly hairy vetting issues, as Obama transition officials have come to think that public-communications skills are key to the job in a time of economic chaos. (“See Hank Paulson? That’s what we don’t want,” says one person involved in the transition.)
Treasury didn't seem such a mystery: Gaithner or Summers. And Gaithner is it. Summers is inside the White House. So the assumption about Corzine was wrong.
So what do all these and Obama’s other appointments tell us? First, that the “team of rivals” meme is vastly overdone. Maybe Obama will appoint one more Republican (Chuck Hagel as U.N. ambassador?), but by and large his administration will be filled with politically like-minded folk. His White House will be chockablock with players (David Axelrod, Pete Rouse, Valerie Jarrett, Jim Messina) central to his campaign, his Cabinet heavy with elected officials (former senator Tom Daschle for Health and Human Services, Arizona governor Janet Napolitano for Homeland Security, Kansas governor Kathleen Sebelius for Labor) who endorsed him early in the primaries.
The liberals bought that meme, as did pundits. Obama underestimates what Lincoln faced; why bring in Hillary? Missed the point.
The thread that binds these names together isn’t ideology but a devotion to a kind of hard-nosed, even ruthless pragmatism. Moreover, Obama’s appointments to critical posts reflect an inclination toward people with deep institutional expertise and major-league political chops, who can effectively drive or implement an agenda.
Rather than a Marxist, a socialist, a lightweight or naive, Obama is proving he is shrewd, and a great politician. While Palin is speaking in front of a turkey processing station, he is organizing his government.
Picking Emanuel was all about mastering Congress, Daschle about actually passing health-care reform (as opposed to think-tanking the perfect, elegant policy solution, à la the Clinton effort in 1993–94). Keeping Gates is about getting out of Iraq without letting the country descend into chaos. The putative Clinton pick carries hints of a similar raison d’être. You can easily imagine Obama telling Hillary: A deal between the Israelis and the Palestinians—go bring that sucker home.
If she does bring it off, her name goes into the history books, for having accomplished something even President Bubba could not and did not.
But choosing Hillary demonstrates more than merely get-her-done, mission-driven hardheadedness. It demonstrates that Obama has finally learned the political power of magnanimity—or least the perception thereof.
See also Lieberman, Joseph, Senator.
It demonstrates strength, whereas selecting her as his running mate would have displayed the opposite (the stories would all have been about how he did it because he had no choice). And it demonstrates a level of self-confidence remarkable even in someone who just won the presidency.
Shrewd: to make a choice because he wanted to, not because it seemed right. Shrewd: astute: marked by practical hardheaded intelligence.
One of the cardinal rules of the Beltway is that you never appoint a subordinate who, for all practical purposes, can’t be fired. Colin Powell was very nearly such an appointment, and George W. Bush came to regret it. Hillary Clinton would be another. Obama is wagering that Clinton will do his bidding and not pursue her own agenda because she will see that her future—in electoral politics, in how she’s treated in the history books—will be bound up with his success. He’s not just bringing her inside the tent; he is making her a tent-pole. This strategy is either shrewd or delusional. But timid it is not.
That was exactly what I felt soon after word was leaked: it would not have been made public if there were doubt on either side. And every pundit has an opinion, and confidence therein, as to what the appointment means: a disaster, a stroke of genius, little in between.
But what strikes me as most interesting about it—along with the other appointments Obama has made so far—is what it suggests about the president-elect, from his conception of his embryonic administration to the size and contours of his ego.
It strikes me that most commentators are so sure of their opinions, that they are not taking time to reflect. This commentator does some reflecting. After outlining the commentary of Tom Friedman, David Ignatius and David Broder (many at MSNBC and CNN quote Friedman as if he were a sage, rather than a columnist), he posits the strengths of the appointment.
But for Obama and his inner circle—notably Rahm Emanuel, his new chief of staff, whose fingerprints are all over the Clinton gambit—Hillary brings an array of strengths to the table, and many of what critics see as her problematic qualities can be viewed instead as assets. Her existing relationships with world leaders and her global star power would allow her to walk into foreign capitals and deal with the president or prime minister on level footing. And in the face of a cratering economy likely to consume the first year (or more) of Obama’s term, handing off the foreign-policy legwork to a savvy, tough, high-profile surrogate with roundly acknowledged expertise on the relevant issues holds no small appeal.
And more:
Then there are the more subtle advantages to picking Hillary. Foreign policy is prone to internecine conflict in any administration, with the secretaries of State and Defense, the national-security adviser, and often the vice-president all jockeying for position. And Obama’s regime—with Joe Biden in the building and Robert Gates likely to remain atop the Pentagon—will be no exception. But Clinton is much closer to Biden than most people realize; that campaign gaffe of his about her making a better V.P. than him was more like a Freudian slip. And Gates, like many Republicans, is said to respect Hillary immensely; indeed, no Democrat is regarded more highly by the opposition and the generals.
Good points about Clinton and Biden. Fascinating, and, to me, surprising how highly regarded she is.
Little of this, it should be noted, is true of the other shortlist candidates to run State. John Kerry and Bill Richardson are both fine men, qualified on paper for the job. But Senator Pompous has long had an intensely competitive relationship with Biden (“They’re like brothers—in every sense,” reports a Biden confidant) and is unbeloved by the GOP. And does anyone really think that Governor Doofus (or, if you prefer James Carville’s formulation, Governor Judas) possesses anything close to Clinton’s candlepower? Or gonads, for that matter? You can bet your last dollar that Emanuel, for one, does not.
Finally, there’s the Machiavellian angle: Obama playing the prince by pulling the old king and queen close. As Dee Dee Myers observed, her former boss is sure to cause Obama heartburn whether he is in the huddle or on the sidelines, musing about the new president’s (inevitable) missteps. “The question is not how to keep him at arm’s length,” she blogged, “but rather how best to harness his prodigious talent in service of shared goals, rather than political mischief.” The odds of doing that—and, incidentally, banishing any stray fantasies of a nomination challenge in 2012 from HRC’s mind—go up by putting his wife on Team Obama.
Bubba won't be disrespecting the Obama Administration too much if Hillary is part of it. Very good point. One Chris Matthews is too hysterical to consider, let alone think of.
The obvious question is why Hillary would do it. What’s she thinking? What’s her game? No doubt part of the reason her people began leaking word that she’s not certain she wants the gig was to cushion the blow in case the Bubba vet turned ugly.
Spin is a Clinton game, and they play it well.
Assuming that Clinton and Obama get to yes, Eric Holder is a go for attorney general, and the Gates assumption holds, the upper echelon of Obama’s Cabinet will be nearly full: only one of the big four, Treasury, remains an unleaked mystery. The Clinton choice matters here. With Obama already catching flak from his base for being too Clinton-centric, Hillary at State probably reduces Larry Summers’s chances of winding up at Treasury. The more likely pick seems to be Jon Corzine, whose stock has risen despite some mildly hairy vetting issues, as Obama transition officials have come to think that public-communications skills are key to the job in a time of economic chaos. (“See Hank Paulson? That’s what we don’t want,” says one person involved in the transition.)
Treasury didn't seem such a mystery: Gaithner or Summers. And Gaithner is it. Summers is inside the White House. So the assumption about Corzine was wrong.
So what do all these and Obama’s other appointments tell us? First, that the “team of rivals” meme is vastly overdone. Maybe Obama will appoint one more Republican (Chuck Hagel as U.N. ambassador?), but by and large his administration will be filled with politically like-minded folk. His White House will be chockablock with players (David Axelrod, Pete Rouse, Valerie Jarrett, Jim Messina) central to his campaign, his Cabinet heavy with elected officials (former senator Tom Daschle for Health and Human Services, Arizona governor Janet Napolitano for Homeland Security, Kansas governor Kathleen Sebelius for Labor) who endorsed him early in the primaries.
The liberals bought that meme, as did pundits. Obama underestimates what Lincoln faced; why bring in Hillary? Missed the point.
The thread that binds these names together isn’t ideology but a devotion to a kind of hard-nosed, even ruthless pragmatism. Moreover, Obama’s appointments to critical posts reflect an inclination toward people with deep institutional expertise and major-league political chops, who can effectively drive or implement an agenda.
Rather than a Marxist, a socialist, a lightweight or naive, Obama is proving he is shrewd, and a great politician. While Palin is speaking in front of a turkey processing station, he is organizing his government.
Picking Emanuel was all about mastering Congress, Daschle about actually passing health-care reform (as opposed to think-tanking the perfect, elegant policy solution, à la the Clinton effort in 1993–94). Keeping Gates is about getting out of Iraq without letting the country descend into chaos. The putative Clinton pick carries hints of a similar raison d’être. You can easily imagine Obama telling Hillary: A deal between the Israelis and the Palestinians—go bring that sucker home.
If she does bring it off, her name goes into the history books, for having accomplished something even President Bubba could not and did not.
But choosing Hillary demonstrates more than merely get-her-done, mission-driven hardheadedness. It demonstrates that Obama has finally learned the political power of magnanimity—or least the perception thereof.
See also Lieberman, Joseph, Senator.
It demonstrates strength, whereas selecting her as his running mate would have displayed the opposite (the stories would all have been about how he did it because he had no choice). And it demonstrates a level of self-confidence remarkable even in someone who just won the presidency.
Shrewd: to make a choice because he wanted to, not because it seemed right. Shrewd: astute: marked by practical hardheaded intelligence.
One of the cardinal rules of the Beltway is that you never appoint a subordinate who, for all practical purposes, can’t be fired. Colin Powell was very nearly such an appointment, and George W. Bush came to regret it. Hillary Clinton would be another. Obama is wagering that Clinton will do his bidding and not pursue her own agenda because she will see that her future—in electoral politics, in how she’s treated in the history books—will be bound up with his success. He’s not just bringing her inside the tent; he is making her a tent-pole. This strategy is either shrewd or delusional. But timid it is not.
Friday, November 21, 2008
For Treasury, Geithner Said to Be Choice; Wall St. Cheers
I was rooting for Geithner. Summers's brilliance can't be denied, nor will it be wasted, but Geithner is a magnificent choice. Same age as Obama (though at 53, merely 6 years older than the other two, Summers can hardly be called old), he has attributes which work: he has a great deal of experience (a Summers protege from the days Larry worked for President Clinton; president of the New York Fed); Wall Street likes and respects him; he represents continuity; and he represents change. Brilliant choice.
A phrase jumped out at me from the story on the Times website this evening; the article discusses the influence and protégés of Robert Rubin (Treasury Secretary under President Clinton, Goldman Sachs alum, centrist):
Michael Froman, Mr. Rubin’s former Treasury chief of staff and Mr. Obama’s classmate at Harvard Law School, is heading the economics personnel search for the transition. Mr. Froman’s head-hunting deputy is Mr. Rubin’s son, James Rubin.
Obama's Harvard Law classmate; Rubin's former chief of staff. Obama is part of the nation's elite by virtue of his Harvard Law degree, and he's tapping his network for his transition and Administration, as he tapped it for contributiond and support for his candidacies.
More and more it becomes apparent that Obama is center-left, the emphasis on center, and not left of it; that he has extensive contacts, and that his organizational skills are superb. That is one of the details that impresses me most: his campaign for the nomination, his campaign for the Presidency, and his transition and Cabinet-building, are all prime examples of magnificent organization.
Palin derided Obama's experience as a community organizer, and some of the masses responded lustily to the insult: community organizer was used as code for black, urban, and poor, as well as liberal, means to insult the urban poor and those who work to help them, liberal intellectuals.
Clearly the ability to organize efficiently is being shown to be a valuable skill. In his campaigns, and now in his transition to the Presidency, Barack Obama is showing his mettle.
Yet it is not only the Republican right wing that derides centrist Rubinism, to coin a term.
The Rubin wing of the Democratic Party has long been disparaged by liberals and union leaders as being too concerned with balanced budgets and free trade. But much of the ideological tension in the party has dissipated as the economy has weakened, and Mr. Obama has signaled that he intends to spend what it takes to get the economy back on track.
What Obama is showing is pragmatism. Yes, he tends to move to the slight left of center on some issues, to the left of center on other issues, but his imprint is clear: what works is what will get done.
Mr. Geithner also seems to fit Mr. Obama’s emphasis on “post-partisanship.” Associates say Mr. Geithner is an independent, though he was a Republican when he first was a staff member at the Treasury Department in the late 1980s under Presidents Ronald Reagan nd George Bush. After college, he worked in the New York-based international consulting firm headed by Henry A. Kissinger.
There are those associates again. But I do declare that Gaithner greatly impresses me.
After leaving the Treasury Department, Mr. Geithner worked at the International Monetary Fund until he was hired in 2003 as president of the New York Fed.
How does someone just get hired as the New York Fed President? He must have had some resume. I think highly of him, and think his appointment continues a strong record for the Obama transition of competency, even brilliance (see Clinton, Hillary Rodham).
A phrase jumped out at me from the story on the Times website this evening; the article discusses the influence and protégés of Robert Rubin (Treasury Secretary under President Clinton, Goldman Sachs alum, centrist):
Michael Froman, Mr. Rubin’s former Treasury chief of staff and Mr. Obama’s classmate at Harvard Law School, is heading the economics personnel search for the transition. Mr. Froman’s head-hunting deputy is Mr. Rubin’s son, James Rubin.
Obama's Harvard Law classmate; Rubin's former chief of staff. Obama is part of the nation's elite by virtue of his Harvard Law degree, and he's tapping his network for his transition and Administration, as he tapped it for contributiond and support for his candidacies.
More and more it becomes apparent that Obama is center-left, the emphasis on center, and not left of it; that he has extensive contacts, and that his organizational skills are superb. That is one of the details that impresses me most: his campaign for the nomination, his campaign for the Presidency, and his transition and Cabinet-building, are all prime examples of magnificent organization.
Palin derided Obama's experience as a community organizer, and some of the masses responded lustily to the insult: community organizer was used as code for black, urban, and poor, as well as liberal, means to insult the urban poor and those who work to help them, liberal intellectuals.
Clearly the ability to organize efficiently is being shown to be a valuable skill. In his campaigns, and now in his transition to the Presidency, Barack Obama is showing his mettle.
Yet it is not only the Republican right wing that derides centrist Rubinism, to coin a term.
The Rubin wing of the Democratic Party has long been disparaged by liberals and union leaders as being too concerned with balanced budgets and free trade. But much of the ideological tension in the party has dissipated as the economy has weakened, and Mr. Obama has signaled that he intends to spend what it takes to get the economy back on track.
What Obama is showing is pragmatism. Yes, he tends to move to the slight left of center on some issues, to the left of center on other issues, but his imprint is clear: what works is what will get done.
Mr. Geithner also seems to fit Mr. Obama’s emphasis on “post-partisanship.” Associates say Mr. Geithner is an independent, though he was a Republican when he first was a staff member at the Treasury Department in the late 1980s under Presidents Ronald Reagan nd George Bush. After college, he worked in the New York-based international consulting firm headed by Henry A. Kissinger.
There are those associates again. But I do declare that Gaithner greatly impresses me.
After leaving the Treasury Department, Mr. Geithner worked at the International Monetary Fund until he was hired in 2003 as president of the New York Fed.
How does someone just get hired as the New York Fed President? He must have had some resume. I think highly of him, and think his appointment continues a strong record for the Obama transition of competency, even brilliance (see Clinton, Hillary Rodham).
Larry Downing/Reuters
Timothy F. Geithner of the Federal Reserve Bank.
Chip Somodevilla/Getty Images
Lawrence H. Summers might become a senior White House adviser instead of returning to the Treasury Department.
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