Posts Tagged ‘Economic Crisis’

President-Elect Obama’s Press Conference: So Far So Good

November 7, 2008

I caught most of President-Elect Obama’s press conference and liked what I heard. I’m very enthused about his gathering the top economic experts together and addressing the public so soon.

My sense is that Team Obama knows it has a very hard road ahead. The secret for them will be appearing to manage a tough problem — not actually being able to solve a systemic global financial collapse with any alacrity.

That’s what was so good about today. Obama did what any thoughtful, engaged leader would do. It’s amazing, but I can’t recall George W. Bush doing anything like this. When policy analysts, for example, pushed for a conference to plan for the aftermath of the War in Iraq, Bush, Cheney, Rumsfeld and company nixed it.

While Obama will be saddled with cleaning up Bush’s legacy, politically he has much to gain from his juxtaposition with 43. Everytime Obama appears to show energy and interest in a problem and communicates to the American people — one of his core skills — he will be judged to be doing a good job.

Now, for the substance. Today’s lineup suggests some real problems for the administration. Included were fiscal hawks, such as Lawrence Summers and Robert Rubin as well as economic progressives, such as Robert Reich. I see a policy battle shaping up between these two factions as was chronicled in Bob Woodward’s book on Bill Clinton’s first term, “The Agenda.”  That conflict ended with Robert Reich’s resignation from the cabinet. The potential for disparate ideas being raised probably guided the Obama’s approach to the media today. They invited t.v. cameras in to spray the meeting but asked reporters to wait for the press conference for “sound” — the exact thing I would have advised for a meeting like this.

That’s not, however, today’s story. It’s enough that Obama showed action and interest. After 8 years of President Bush, that’s good enough for me.

Larry Summers Previews Barack Obama’s Economic Policy

October 31, 2008

Former Treasury secretary and Harvard president, Lawrence Summers is advising Barack Obama on matters of economic policy. He spoke this morning at the Greater Boston Chamber of Commerce.

Summers presentation was well-organized and strongly delivered (without notes.) He said the new president will face five major challenges:

1. Mitigating the Financial Crisis — the new president will have to find a way to keep credit flowing. He cited a program he started at Harvard where banks covered tuition and living expenses for graduate students, killed by the bank during the last month.

2. Reforming the Economic System — America tends to have economic crises every three years. The new president will have to figure out a way to balance risk better. He hinted at a “clearing house” or “exchange for derivatives.”

3. Addressing Income Inequality — He said there had been a 700% transfer of wealth to the top 1% in recent years. He urged returning to tax levels of the 1990s.

4. Confronting the Health Challenge — He said he didn’t see a single-payer system in the cards unless another Clinton-style health care reform effort failed.

5. Meeting Globe Energy and Environmental Needs– More clean tech, less reliance of Middle Eastern oil.

Here’s what he had to say about Obama’s campaign: “I have enormous admiration for Senator Obama and the campaign he’s run…I’ve never seen one that is as calm, methodical…as lacking as leaks as the 1 McCain has run…It speaks enormously to his managerial and leadership capacity.”

He concluded his remarks with a curious remark: “Rationalizing our approach to the Middle East has the benefit of freeing up resources to other parts of the world.”

I assume he was referring to the war in Iraq, but he could have been very easily referring to foreign aid to Israel and Egypt. Given Joseph Biden’s recent comments about a looming self-generated foreign policy crisis in the future, who knows?

Another Reason Why the Economy is So Bad for John McCain

October 11, 2008


Republicans, traditionally, embrace the free market. Today the news is all about how the seven leading industrialized nations are agreeing to collaborate to solve the economic crisis; Secretary Paulson has announced that the United States government is prepared to take positions in the largest banks.

The news that everyone is talking about represents a tremendous amount of government intervention, something that would have been unthinkable even a few months ago. The plan involves government on a scale unrivaled since the Era of Franklin Roosevelt, and it is being backed, supported and promoted by a Republican president.

Unless McCain is ready to take the unprecedented action of reorganizing his campaign around Calvin Coolidge libertarian economic principles (the ones that lead to the first Great Depression) he has no political play on the most important issue of the day. That McCain has never given economic issues any serious thought compounds his problem.

With leaders around the globe returning to a Keynesian — even Galbraithian — approach to solve economic problems, voters, understandably, will turn to the political party that believes in government intervention into many areas of life, the Democrats. That’s the tide that McCain, even with his laudable resume, is up against.

A Lay View of the Financial Crisis

September 25, 2008

I understand the anger on Main Street over the possibility of the $700 billion Wall Street bail out plan. Why should the American public, after all, rescue Wall Street fat cats? Here’s my simple view. The Little Guy certainly didn’t profit during the recent financial boom, and, even if he did, it wasn’t on a scale anywhere near the big wigs. A drastic downturn, however, could touch everyone. Mortgages, home improvement loans, credit cards, commercial credit — the economy needs all these to hum along. If credit dries up, we could all suffer.

So, I suppose the ugly truth is that while only some Americans benefited from good times, everyone gets hurt if things go bad.