Obama's Speech and America, Inc.
Wednesday, January 26, 2011 at 9:34AM Watching Obama deliver his State of the Union Speech last night, reminded me of all the rah-rah quarterly meetings that we had to attend as Managing Directors at Goldman, where senior management would remind us all of how great we were, and if there were any areas of competitive weakness relative to our adversaries at other banks, all we had to do was step up our game, innovate and globalize (or something like that.)
Obama wasn't delivering a summary of what has, or is, going on for most Americans last night, no such negative status report. And, if you didn't expect him to, he gave good speech - full of reminders of how it is America's destiny and the American dream to be great and powerful, "robust democracy" that we are.
There was a massive pink elephant in the room called reality though. So, when he waxed proud when he said, "We are poised for progress. Two years after the worst recession most of us have ever known, the stock market has come roaring back. Corporate profits are up. The economy is growing." I had a different reaction.
My reaction was wtf? Two years after the worst recession? After? Really? What about the 26 million people unemployed or underemployed in the country? What about the 4.4 people applying for every job, compared to the 2.9 people per job after the 2000s recession? What about the 4.4 million jobs that should have been added, just accounting for a population coming of job age alone, forget any kind of growth, compared to the fact that instead, the job pool declined by a quarter of a million people in the past two years, because the time required to get a job is at record highs? What about the nearly 8 million FAMILIES that have been foreclosed upon because of the reckless investment bank race to create $14 trillion dollars worth of toxic assets in the five years leading up to the financial crisis and leave them to shatter lives and the non-stock market evaluated economy? What about the fact that the government fiscally stimulated the banking system by a multiple of 20 times more than it stimulated its citizens, with nary a fight from the politicians our democracy is so lucky to have as representation? What about all that warm, cuddly multi-trillion dollar support from the Fed and the Treasury Department on our country's way to Sputnikian economic greatness?
"The rules have changed," said Obama.
Yes, they certainly have. Businesses can offshore jobs because it is in their best profit and shareholder and stock value interest to do so, with no federal incentive to alter this strategy - that's why corporate profits and CEO salaries are up, whereas the average median employee salary on a comparative basis is stuck somewhere in the 1970s. That's why staring at the abyss of potential bankruptcy in the fall of 2008, Goldman Sachs and Morgan Stanley got the Fed's blessing to become federally subsidized bank holding companies. And we, taxpayers, are still on the hook for the Fed's $29 billion of backing of Bear Stearn's assets taken over by JPM Chase in a government sponsored merger in the Spring of 2008 and coming with a bunch of still-being-wrangled lawsuits, not to mention gleeful federally backing of the further consolidation of the banking system to fewer, more powerful, more obtuse, more risky players.
All of which, though technically not a result of changing rules, but rules staying the same and working for the reckless, were still rubber stamped by the Obama administration (yes, and Bush too, and Clinton's deregulatory team, etc.) and its financial king's, Tim Geithner, until recently Larry Summers, and incoming JPM Chase's Bill Daly and GE's Jeffrey Immelt as job czar. (GE and JPM Chase, having been happy bailout recipients, of course.) Small businesses can't hire as many people, because they can't afford their financing, even if banks will give them usefully sized loans, they don't get the 0.25% interest money the banks get from the Fed when they need it. Individuals got hosed, meanwhile, by shady home loans and shadier modifications and higher fees on all sorts of credit, from cards to student loans (a record $884 billion of which are outstanding to students whose tuitions rise as their job and loan-payback prospects fall).
We're not talking just about steel mill job eliminations over the years, we're talking about the solidification of the administration's decision to ignore the mistakes and devastating consequences of Big Finance and Obama suggesting last night, that people consider becoming teachers, with a smile. No disrespect to teachers, of course, they work much harder and make do with much less than traders, but you don't see Vikram Pandit, Citigroup CEO rushing out the door to become one, no you see him getting approved for a RAISE, of the sort a teacher can only dream about, from a base salary of $1 million to $1.75 million this year, after Citigroup's survival was ensured only because of massive government stimulus. Why? Because he is now valued at a 75% pay increase, that Washington, and Obama would like to believe is due to his hard work, and not to a government handout. America at its best.
There were some useful elements to his otherwise CEO like speech (you department heads sitting out there - you work together so America, Inc. can be the best it can be.) They included adopting a fair immigration policy that doesn't chuck people out of the country because the path to being here is so laden with decade long bureaucracy and cost, keeping some elements of an otherwise insurance-company gift of a health care reform bill that the GOP House just repealed and that doesn't reform the cost of health care - such as covering pre-existing conditions and people up to the age 26 under their parents' plan (if their parents have a plan, that is) even though Obama backed off from even trying to convince the room to consider full coverage for all without egregious premiums, and wanting to increase the spread of clean energy initiatives (that he said will create 'countless jobs' as opposed to the countable 5 million he said it would create during is campaign.)
But, in the end, Obama's practiced eloquence in delivery, peppered with a few American success stories - who can deny the hero behind the Chilean mine worker rescue his due? - and the now-debated investment over spending word choice, belied a strong dose of something akin to condescension. If you don't have a job, it's because of the Internet, not the banks hoarding $1 trillion that we gave them at the Fed. If we're falling behind China in education, it's because bad teachers should be removed, good ones rewarded and parents (who apparently aren't doing as good as job as they could of this) are not focusing on the education process more at home. If America, has the 'most prosperous economy in the world' for its corporations and financial insitutions, its because we all share a common, attainable dream.
So, just go out and innovate and compete and get it. We'll be here watching the banks' backs.
Reader Comments (28)
Dear Nomi
I also missed B.O adressing the financial sector and problems there. He seems preoccupied with selling some kind of B.S "recovery" story....
I am a Norwegian grad. student in Political Economy, and I study with many students from the US (East and West Coast).
When I (maybe in a not too polite way) point to the fiscal disasters and the real ressesion I believe lying ahead, due to the irresponsible monetary policy of the gov/FED/WS, I am not completely made a fool of, well by some, "Do you really think "THE US" will not recover, come on!", but I do think the reality is a very hard pill to swollow for most young Americans. It would be for me too if our stupid Norwegian government behaved equally stupid. They are not there yet, but give them some time, they will follow.
Should I just leave the matter althogether? What would you say to young US Economists/Pol. Science students studying abroad (in Europe)? What advice would you give them as to where they should invest their future?
Martin,
Such a great question at the end of your comment - just the fact that you are asking it, is doing something ,is doing a lot. It may sound corny, but I think getting a personal handle on how things really operate is very useful to navigating the future. I don't think any government should indefinitely bolster its largest financial mistakes, without admitting them - it's not responsible morally or economically. So, I'd say that young economists/political scientists shouldn't be blind-sighted by rhetoric or even theory, but strive to draw their own conclusions from data and circumstance that's available and changing every day in the world around them. For me, when I graduated college and grad-school, I got degrees in Mathematics and later, Statistics - and when I was on Wall Street, rather than believe in theory, I tried to be aware of reality, which I hope gave me a more balanced (albeit sometime more cynical) perspective and led me to draw my own conclusions. Real knowledge can be frustrating, but also very enlightening and powerful because of that.
While one must certainly agree with all your various comments, I'm afraid that such relatively accepting data such as:
"...about the 4.4 people applying for every job, compared to the 2.9 people.." doesn't even begin to address the reality that in surveys of number of applications submitted for very average jobs, the worst state runs at 265 applications received for each announced opening, while the best state runs about 65 applications received.
But seriously, it is really about 10,000 applicants for each job when factoring all thoe jobs offshored, all the foreign visa workers imported, all the undocumented or illegal workers from ALL OVER THE PLANET, and slave laborers brought in by human trafficking criminal rings and operations.
But that aside, the overly tedious and tired point of innovation is beyond stupidity: when they offshored our jobs, they also offshored the technology we created and developed along with them.
Few Americans are motivated to innovate for GE -- that private equity firm and multiple hedge fund operator -- ever again. Few Americans are willing to work themselves to death for low pay, no healthcare benefits and a short worklife when their short-term job is offshored, or replaced by yet another H1-B, or H1-C, or H2-B, or O-1, or L-1, or P-1, P-2, P-3, etc., etc., etc.
There is NO economy in the USA, simply the fantasy finance sector which employs only 7.4% -- and who knows how much of that figure is comprised of American workers?
Money to Wall Street to benefit Wall Streeters --- whereas once upon a time, the purpose was to raise money for American industries -- which today have all been offshored, dismantling the American economy in the process to benefit all those debt-financed billionaires.
2011 and 2012 (especially Nov-Dec) looks really, really bad.
Dear Nomi, Thanks for your reply.
What you are suggesting is actually what we are doing, atleast some of us. The study of Political Economy can be quite broad. From EU-studies (very theoretical in repsect to integration, nation-states bla bla), to more "hard core" Rational Choice models trying to explain and empirically test how politicians maximize for reelection by e.g. geographically allocation funds to electorates.
Students that are engaged in these "hard core" studies (machine politics, swing voter model, etc) tend to distrust politicians more. Because the data speak "for themselves", the students more occupied with theoretical questions ("qualitative - case studyies etc) tend to be more "naive" (?)
Probem is, few are using US data, and the data is hard to obtain, atleast it appears to be, and it might be biased... CPI is a joke ! So is Employment figueres.... Personally I need more experience with advanced regressions, but it will come. I enterpret your answer as encouraging us to continue questoning policy "intention" and effect disparities. And we will do so!! :) I am gonna suggest your book for the library at campus.
Sgt Doom - thanks for your whole comment, but especially pointing out the employment stats I was using don't even begin to describe the situation - I often take other people to task on that sort of thing, so I appreciate it.
And, Martin - I guess that's an example of how statistics aren't always complete or even accurate. And even the more quote employment figures, as you say, are a joke - because of many reasons, them being done on a survey basis, only a start. In terms of advanced regressions, also think outside the box on using non-standard variables or data and compare. Or create your own, I find that going into a Starbucks for example and keeping track of changing coffee prices is as effective as looking at CPI sub categories. Thanks for suggesting Pillage.
Nice essay, Nomi. It inspires a tangent from me.
The first goal of an empire: occupation.
The last refuge of an empire: printing fiat currency.
The U.S. economy is done. Obama is the closer. It's time to abandon the government that long ago abandoned us. It's time to prepare for no fuel at the filling station, no food at the grocery store, and no water coming out the municipal taps. It's time, in other words, for the living planet to make a comeback.
Guy; Have you read Johan Galtung?
http://www.youtube.com/watch?v=o2FySvGb5t0&feature=related
Nomi: Thanks again for your answer. Validity and creativity are not always mutual exclusive \...
Martin, I haven't read Johan Galtung. Thanks for the youtube link, which is excellent.
My own abundant writing at guymcpherson.com has been influenced by Daniel Quinn, Derrick Jensen, John Zerzan, Kurt Vonnegut, and many others. Please drop by.
The US is not done. It has more natural and intellectual resources than the rest of the world combined. It has the strongest regulatory and judicial framework of any region (ignoring hidebound regions like Scandinavia). If Bolivia is so wonderfully democratic then why aren't Americans sneaking in there? Self-promotional and narrow-minded cherry-picking.
The US has the most extensive colonial system ever developed and a mind-boggling military empire to enforce exploitation. Like The Predator says, we had a horrific civil war that tore this country apart, but we bounced back with no problems. And like Jerry always says, trendline continued without deflection. Get off the bandwagon. Bad times ahead. So what? That's why they call it zero sum.
Please read the essay at this link, Warren, and let me know how the U.S. will survive another couple of years: http://guymcpherson.com/2011/01/third-times-a-charm/
And then explain why that's a good thing. After all, empire requires obedience at home and oppression abroad. I've had enough of both. You?
Nomi,
Obama's address was merely the latest example of official "truthiness." Aside from the obvious job strife and visible economic problems that officials are not eager to talk about, government is pro-actively hiding the true financial picture by, in effect, condoning massive accounting fraud. It is no coincidence that suspension of mark to market accounting under FASB 157 coincided precisely with the beginning of the rally in 2009. There is still no mark to market but one only needs to examine a few facts to know why mark to market rules remain suspended. To wit, 46% of all US banks' assets are backed by real estate collateral. It is also a fact that real estate value for residential and commercial properties declined by 30% to 40% from the peak, on average. So, if collateral backing half of all banks' assets is down by this much and capital ratios at banks are less than 10%, how can the system not be insolvent, in aggregate. Does not mean that every bank or every loan is bad but where are the implications of this massive factual impairment? This is why Enron and Worldcom execs are in jail - material misrepresentation of financial condition.
The hope is to buy enough time and dig out of this hole but the hole is too deep this time. Tough times ahead.
Obama said this generation will have to "sacrifice" and "struggle" for the future - why not be more inspirational and say we need to STRIVE for the future.
If you are over 40 you are already beaten - you already worked and built your career, bought your home, saved your money, and then...gone. thanks but no thanks.
the thought of any more "sacrifice" or "struggle" is making that hut in Uruguay look very inviting...here's to the new ex-pats - the tired older generation not the self absorbed younger ones- because we don't have the strength nor the passion to do it again and watch it be taken away by plain foolishness.
Nomi,
It's a lot easier to kick down a door to build one. Leave the sniping to the tea party whiners are zerohedge and offer something.
Most disturbing part of the speech are the words:
"Let me take this one step further. We shouldn’t just give our people a government that’s more affordable. We should give them a government that’s more competent and efficient. We cannot win the future with a government of the past."
I would argue we cannot win the future with the government of the present. The proposed pipe dreams of what "we are going to do" are just sour notes in this symphony of corruption.. Performed by "we the people" who are being lead by a puppet conductor. The world listens to our anthem, while looking for a hole to get sick in.
When someone has to use a major speech to remind his listeners of what a great country they are, and how their country always wins, that country is toast. People, and countries, that really have it together don't have to go spouting about it all the time. Obama is whistling past the graveyard of empires...
thank you for your article; it was excellent. our destruction was done so slowly, a multi-year process that most Americans didn't really understand what was happening to the country until near the end when it's just too late. the U.S. banking system is insolvent; we should end the FEDERAL RESERVE BANK & take the insolvent banks into receivership ; but, the politicians don't dare wipe out the shareholders . my reading tells me that it's far worse than anyone even realizes. the people's gold in FT. KNOX has long been looted by the FEDERAL RESERVE BANK & the Wall St. bankers; the U.S. TREASURY has been looted (thank you Robert Rubin, Hank Paulsen, Tim Geitner) . a criminal syndicate is running our country......... so what are we going to do about it ! ? What about our kids & our grandkids !
Hey BoredOFWebGeniuses,
Nomi didn't kick down the door.
She's pointing out that the door has been alread kicked down and who did the kicking.
And if you were familiar with her writing, you'd know that she has also clearly stated on numerous occasions exactly how WE need to build the new door.
Though I personally believe that the only way that's going to happen at this point in time is through insurrection first and foremost. Which ironically will require a lot of additonal doors getting kicked down.
Whenever I watch our Congress in action I'm reminded of this scene from
Monty Python's Life of Brian and imagine John Cleese (Reg) as the Chairperson.
[Judith runs into a People's Front of Judea commitee meeting, panicked.]
JUDITH: They've arrested Brian!!
PFJ: What?
JUDITH: They've dragged him off. They're going to crucify him.
REG: Right. This calls for immediate discussion!
JUDITH: What?!?
REGULAR: Immediate.
DIET: Right.
LORETTA: New motion?
REG: Completely new motion. Eh, That, ah. That there be, ah, immediate action...
FRANCIS: ... ah, once the vote has been taken.
REG: Well, obviously once the vote has been taken, you can't act on a resolution 'till you've voted on it!
JUDITH: Reg, for God's sake, let's go now, please!
REG: Yeah, yeah. Right, right. In the, in the light of fresh information from, ah, sibling Judith.
LORETTA: [taking notes] Ah, not so fast, Reg.
JUDITH: Reg, for God's sake. It's perfectly simple. All you've got to do is to go out of that door now, and try to stop the Romans nailing him up. It's happening, Reg! Something's actually HAPPENING, Reg! Can't you understand? Yaaargh!
[Judith rushes out in a rage.]
Where's our Ferdinand Pecora.
I love this forum. So much intelligence. THANK YOU GUYS and NOMI. Keep writing!
I think the American people want to see the president talk about TRUE reform within our country. The middle class is eradicating as the top tier of wealth earners continues to separate itself and maintain its cushion of tax breaks and convenient outsourcing of labor and usage of offshore tax shelters to amass more wealth. I wanted to hear Obama talk about the Americans who've been displaced from their homes because of shady loan modification practices which have added to the number of foreclosures. I think the American people wanted to hear the president continue to hammer credit card companies, their lobbyists, along with mortgage companies to work out deals for those who were enticed to follow Bush's and Greenspan's advice of buying a home they couldn't afford, and using their equity as a credit card. The American people wanted to hear Obama admonish the Right for their opposition to the raising of the debt ceiling when Bush added almost 5 trillion to our deficit in his 8 yr. term. The American people wanted to hear Obama explain why he hasn't pulled our troops out yet as he promised in his campaign. The American people wanted to hear why Glass-Steagall or regulatory measures like GS have not been reinstated to protect our country from the same shenanigans that debilitated our economy for the middle and lower classes but gave investment bankers some of their most lucrative bonuses EVER. The American people want to know why Obama supports the Right in their effort to dismantle public education but doesn't address the need for vocational education, and unfairness of holding classroom teachers accountable for student performance on a test that doesn't measure classroom learning, but rather reflects IQ academic intelligence. The American people want to know why Obama doesn't protect the sanctity of unions and Social Security more aggressively, instead allowing the Right to try and privatize both depriving those who need protective measures in place so they will have fair working conditions, and something reliable when they retire. The American people want this president to deliver on his promises and not continue to align himself with those same CEO Wall Street-type contributors who are going to pour money into his campaign and force him to compromise his promises, only to keep the insane stratification of wealth disbursement that is ruining this country. And lastly the American people wanted Obama to encourage Congress to make REAL reform with gun control and impact change with the purchase of ammo, background checks on gun purchasers, and types of assault weapons that gun owners are allowed to possess.
I had almost missed this: Win The Future from Obama's -- or probably more accurate to say -- the US Chamber of Commerce's state-of-the-union address to the serfs (WTF).
And that Wikileaks Task Force (WTF).
They also have a team in the DOJ which goes by the acronym Operation Identify Leakers (OIL).
Yup, quite the continuity between the Obama-Bush-Clinton-Bush-Reagan administrations.
I heard several people lately, a pseudo-feminist from the Council on Foreign Relations, I believe her name was Elizabeth Coleman, and another pseudo-liberal from the Council on Foreign Relations, Allison Stanger -- whose neocon-financed educational "think tank" at Middlebury goes by the cutesy acronym Center for International Affairs (CIA -- get it???? Cutesy to the max!)
These people are ever so obvious and laughing all the way to the bank(sters) who pay their salaries to confuse and bewilder the rest of us.
SADLY, TO WARREN, you are completely and totally deluded, dood, if you can't understand fundamental arithmetical relationships: over 60% of the US GDP is derives from the five top banks (JPMorgan Chase, Goldman Sachs, Morgan Stanley, BankofAmerica and Citigroup), and around -- or over -- 70% of the GDP derives from the Fantasy Finance Sector -- that is exactly why there is NO economy and America is so over. And that figure, "70%" is the crucial one to pay attention to as we've now reached the point where over 70% of American-based multinationals and corporations PAY NO federal taxes, while offshoring American jobs, and/or creating new jobs overseas, thus further destroying the American tax base.
Just as there is NO economy, there exists NO media, but instead we are all dependent upon sites like this to glean the truth of today's circumstances.
Thanks for this site and the few other enlightening ones out there.
SOMETHING ELSE TO WARREN:
When a bank (JPMorgan Chase and BankofAmerica) can seize an American citizen's house not only when it has been fully paid for, but paid for in cash without ANY mortgage loan ever taken out on it, and when a bank (Wells Fargo) can seize a customer's automobile, even when it too has been fully paid for --- that says the banksters are all-powerful, and the citizen has no rights whatsoever.
Truly, America is screwed.
Final thought (sorry to be so repititious) to any and all who are thinking like Warren (and believe me, I am usually the perennial optomist), just take five minutes to view this:
http://csper.wordpress.com/2010/11/11/discussing-the-debunking-money-series-with-max/
Great discussion and excellent dissertation Nomi, after seeing you on Max Keiser's RT show, I was stunned with your knowledge and articulation, keep up the great work, I'm a big fan. Perhaps you could become the next Fed chairperson or Treasury Secretary; you meet the fundamental requirement of being a Goldman Alumi...
Ms. Prins,
Please read this article and tell me that the collapse wasn't a massive insider trading maneuver - Control Fraud controlled by the big 5 investment banks control of the FED, SEC, and FASB. In reading William K. Black and understanding the mechanisms he describes as control fraud on a bank level, it appears what I uncovered is a Control Fraud operated from within the FED. I'd like someone with your inside experience and honesty to tell me I'm wrong.
The Big Short: Why The Rush For The ABACUS Settlement
You do great work and are to be commended for your work to shine a light on the political - economic trouble of our time. The world owes you a debt of gratitude.
I was just introduced to Nomi's work yesterday, and have been reading as much as I can find now.
I am also impressed by the prescient comments and back and forth.
I have been a student of history, social engineering, and intelligence analysis for many long years.
What I find most astonishing in our circumstance is that what is happening today should come as a surprise to none. It is not as if the power elite have made a real secret of their plans—other than hide it in plain sight behind the screen of media and academic distraction.
What the world is experiencing today is the fruition of a very old agenda. This is the New World Order. The planning is in the open record.
The problem is not one of facts, nor even reasonable argument. This problem is psychological, a pathology purposely and scientifically established by social engineering. A program bought and paid for by the Money Power. The very same entity that Jefferson, Lincoln, Jackson, etc, fought and warned of.
“It is the banks and the corporations that [have] grown up around them,” as Jefferson warned, “that will leave our posterity homeless”...
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Hi Dick,
And thanks for including a link to this piece. William Black is remarkably clear on all of the entanglements amongst the various government agencies and the banks and the Fed. (I had a chapter in Pillage called, We Already Have a Bad Bank, The Fed.) I think this part of the article says it all:
"he Financial Accounting Standards Board, pressured by U.S. lawmakers and financial companies, voted to relax fair-value accounting rules that Citigroup Inc. and Wells Fargo & Co. say don’t work when markets are inactive. "
Basically, when you can value your assets anyway you want, particularly in the worst of times, you evaluations are pretty meaningless and can be manipulated as needed. Manipulation and fraud are closely related in my book.
Hello Nomi,
First let me apologize. I've been so busy trying to hang on to my company and writing, like a person who forgets to take a list of who to thank at the Emmy's, I have forgotten to thank you, like I thank Professors Black, Stiglitz, Krugman, and Reich. I have obviously read your work and your inside experience is something that fused with the knowledge gained reading them. So Kudo's to you, and thank you for the work that you do.
Back to my reason for reappearing on your blog, Robert Redford accelerated my plans for a book where I was going to link my articles on Newsvine and Wordpress into a book along with new knowledge. He announced a new movie that is apart what I had hoped to write, so I moved into high gear so as to establish a producers/writers beachhead on the subject. I created a movie..clips from YouTube sequenced in such a way as to take the viewer on the same experience of reading my book in advance of the book. You can find the link to the movie at a short article I wrote to explain to the potential viewer what kind of intellectual trip the movie is going to take them down. Click here to view it.
I have uncovered the hidden institution that is behind the the movie, do you want in making the next production? You've got my email, shoot me one if you'd like to join the production.