Thoughts on the Non-State of the Union State of the Union

What has always struck me about President Obama is that, regardless of the circumstances, he seems like he is the adult in the room. Whereas Bush was the drunk uncle at your cousin's wedding who was hogging the microphone for far too long, Obama is an almost grandfatherly figure - the elder statesman, the bridge-builder, the wise man (not a wise guy, like Bush). He is a leader capable of both sobriety and inspiration.

Tonight's address was classic Obama: a mix of cautious conservatism and some pretty lofty (liberal) goals. He is right in that, as we find ourselves in the midst of this great economic crisis, NOW is the time to tackle the problems that have dogged us for too long: health care and energy being chief among them. Our health care "system" - if you can call it that - and our importation of foreign oil is short-shrifting our citizens, poisoning our planet and putting a burden on our economy. Now is the time to tackle these problems, not shy away from them.

At 9:00 tonight, before the President's address, I found myself in my customarily pessimistic position as I reflected on the sorry state of our national economy and conscience. But as he has so many times, Obama somehow has managed to turn my frown upside down, and reframe this moment as a possibility for rebuilding and renewal, as opposed to a complete meltdown of the world as we know it. The job before him - and us - is extraordinarily difficult, if not mostly impossible, and none of what the President outlined tonight will be easy. But I have been reminded once again of the importance of having faith that we will get there. We will get there. And we will be better off when we do.

Re: The Auto Bailout's Failure

Based on what the Senate Republicans have done here, and the contempt they have shown for the United Autoworkers Union, I hope no working class person ever again votes for a Republican candidate. No matter what crap they spew otherwise, they are not the party of working people, never have been and never will be.

Oh, By The Way...

...we're officially in a recession, in case you hadn't noticed.

So on December 1, 2008, the National Bureau of Economic Research declared that we have been in a recession since December 2007:

The announcement means that the downturn is already one year old. That is longer than the average length of 10.5 months for recessions since World War II. The current record for the longest recession over the last half-century is 16 months, which was reached in both the downturns of 1973-74 and 1980-81.

So we're already in worse shape than we've been in at least 35 years, and there's no end in sight, either.

Incidentally, I didn't even know that we had a National Bureau of Economic Research, but as long as we do, how about they research these things as well:

• Why does the bailout money seem to not be having any effect?
• Why are the credit markets still frozen?
• Is a multi-trillion dollar stimulus package (like the one Obama is proposing) really going to help us get out of this rut?
• Should we let Detroit go bankrupt?
• When is this going to end?

The scary thing is that I feel like I hear these questions all the time on the news - but I never hear any answers. Now, a lot of the questions asked on the news are very dumb questions indeed, but still - with all the back-and-forth incessant parroting of the mainstream media, you'd think that by this point someone somewhere would have somehow come up with some kind of sensible plan to get us out of this mess.

I'm an economics newbie, if not an economics know-nothing (which is probably closer to the truth), yet even I can tell that it seems like for this mess, there are no quick fixes or easy answers.

Oscar season is arriving just in time, my friends.

Bailout for Dummies

Here's a credit crisis glossary to help you with the who's who's and what's what's of the bailout and economic mess.

I'm also ashamed to admit that I first saw the link to this in the toolbar above my Gmail inbox, but I went to the site and actually found it pretty helpful (keep in mind that I am dumb when it comes to the economy...).

On The Other Hand...

Forget the Larry Summers drama (if there is any) for a second. Obama also appointed Berkeley professor Christina Romer to head his Council of Economic Advisers. Romer is well-known in economic circles and is popular with both Democrats and Republicans (a lot of Obama's appointments are popular with both parties, aren't they?):

Romer has described herself as having “liberal Obama-heavy political views," but her work has drawn support from both parties.

She burst into the economic scene with her doctoral dissertation that fundamentally changed how economists viewed the Great Depression.

Economics data indicated that the business cycle before the Great Depression was much more volatile than the economy after World War II. Economists widely assumed the data demonstrated the success of the post-Depression stabilization policies. Romer proved them wrong by showing that what seemed like a decrease in market volatility was really due to improved data collection.

Since then, she’s done extensive work researching the causes of the Great Depression and the roles that fiscal and monetary policy played in the country’s economic recovery. More recently, she has focused on the impact of tax policy on economic growth in papers co-authored with her husband.

So she's an expert on the Great Depression, which is the only thing close to the crisis we're in right now. This strikes me as an excellent pick, Mr. President-elect.

The Secrets of Larry Summers

Obama has promised us the most open, transparent transition in American history. But there are some murky details involving Larry Summers, the former Clintonite and Harvard president who will be the head of Obama's National Economic Council. Summers spent the last few years working at a hedge fund called D.E. Shaw, of which relatively little is known:

The firm’s core specialty is in statistical arbitrage, which involves buying and selling huge numbers of stocks in very short amounts of time, ranging from mere seconds to several days. But how they make those decisions is very closely held information.

“That’s where they get very secretive and squirrely and won’t tell you what they’re doing,” the observer said. A spokesperson for the Obama transition team declined to say what Summers had done for the hedge fund and how much he had been paid. But the Obama camp likely knows the answers, since the vetting questionnaire for applicants for administration posts requests tax returns and other detailed financial information, including the applicant’s net worth, real estate holdings, business partnerships, even gifts.

Lightly regulated hedge funds are not required to file detailed information on their financial performance with the Securities and Exchange Commission. So, it’s difficult to estimate how well or poorly D.E. Shaw has weathered the global financial crisis in recent months.

There is, fairly or not fairly, going to be a lot of scrutiny and sensitivity involving all the details surrounding Obama's economic advisers. With the current crisis, in which people who were supposed to be responsible regulators turned out to be irresponsible shmucks, we're going to need to know everything about the new people coming in - who they are, where they're coming from, what their economic philosophies are, whom they've worked for in the past, how they'll fit in as part of the Obama administration. This is all reasonable information to ask for.

I'm pretty confident that Larry Summers, who is well-known and well-respected across the board, hasn't been doing anything shady at D.E. Shaw or anywhere else. That being said, a lot of people blame him - along with some other Clinton-era guys, like Bob Rubin - for contributing to the current economic crisis. So it would be helpful if he could be as forthcoming as possible about what he's been up to lately, especially if he's been working at a hedge fund that, in the words of a source in that article, seems to be "riding out the storm" whle a lot of other companies are sinking.

Is Now The Time To Go Green?

Well, yeah, if you ask me. But I would have said that years ago. Bradford Plumer argues that, because of the recession looming on the horizon, now might actually be the perfect time to implement a "new energy economy." A highlight:

If there's any upside to a recession (and it's hardly much consolation), it's that the accompanying decline in energy use gives us some breathing room to meet long-term emissions targets. (The rough consensus among climate scientists is that the world should aim to cut greenhouse-gas emissions 50 percent below 1990 levels by 2050, a goal that sounded increasingly preposterous in recent years as countries were belching up carbon dioxide at a pace exceeding even the direst forecasts of the Intergovernmental Panel on Climate Change.) The downside, however, is that the fall of oil and gas prices is forcing investors to shelve alternative-energy projects: The WilderHill index of clean-tech stocks has tumbled more than 50 percent since September, and even T. Boone Pickens is putting aside his beloved wind farms for now. The main reason the solar and wind industries aren't facing total collapse is government policy: Some 30 states have laws requiring utilities to get a fixed percentage of their electricity from renewable sources by a certain date.

Just do it, already. It's my generation - our generation if you're reading this and you're my age - that's gonna have to pay the price for our irresponsibility when it comes to energy.

Citi/Taxpayer Field

That's what two New York City Council members want to call the New York Mets' new ballpark, opening in 2009.

Citigroup owns the naming rights to the park, and announced months ago that the field would be known as Citi Field. The kicker, though (man, there's always one of these!) is they're getting bailed out by the federal government - and, by extension, the taxpayers - to the tune of billions and billions of dollars, so renaming (part of) the park in honor of the people Citigroup owes for its survival doesn't seem all that unreasonable.

Personally, I love the idea. I love it. Besides my disgust at bailout after bailout after bailout to these huge corporations, I also hate the New York Mets. How much would it suck to have to play at Citi/Taxpayer Field?

Good Question

Matthew Berger, blogging for Marc Ambinder over at The Atlantic:

When was the last time we saw a deputy director of the Office of Management and Budget announced by an incoming administration at a press conference? And before the naming of the secretary of state?

ECONOMY ECONOMY ECONOMY ECONOMY ECONOMY AAAAAHHHHHHHH!!!!!!!

Times Have Changed

So have you noticed how the Republicans' hysteria over "OBAMA IS A SOCIALIST AND HE WILL RAISE YOUR TAXES!!!!!!!" is not only fake, but ineffective? Yeah, I've noticed too.

In the NBC News/WSJ poll out earlier this week, it showed Obama - a Democrat - winning on the issue of taxes by 14 points. Remarkable. And now here's this Dan Balz article from today's WaPo about this phenomenon.

By most accounts, Obama has a huge lead on the issues of the economy, jobs and health care, and has basically pulled even on taxes and the "strong leader" metrics. If that holds, this could be a blowout, my friends.

More Economic Fallout

Because of the global economic crisis, the EU is considering scrapping its current agreement to scale back emissions 20% by 2020:

The disagreement predates the global financial turmoil that threatens to cause a prolonged economic downturn. But as Hungary's currency crumbles, stocks hover at alarming lows in Poland and real estate prices plummet in Slovenia, the depth of malaise in the east has given greater urgency to New Europe's calls for scaling back planned emission curbs.

Their push worries environmental activists. They question whether eastern Europe's post-communist commitment to the environment is shallow, with leaders happy for the opportunity to rechannel resources into bolstering pensions, boosting employment and lowering inflation.

This distresses me. I get the economic anxieties of the poorer, predominantly eastern European nations. But the climate crisis is something that transcends even the global economy. It is a disaster - and a looming, potentially even-greater disaster - of truly epic proportions, and we must do everything we can to stop it for ourselves and for future generations, even if that means some economic hard times in the present.

"Are We Rome?"

Maureen Dowd goes there:

The decline and fall of the American Empire echoes the experience of the Romans, who also tumbled into the trap of becoming overleveraged empire hussies.

As our sand-castle economy washes away under the tide of bad gambles and debts, this most self-indulgent society lurches toward stoicism (even bankrupt Iceland gives us the cold shoulder and turns to a solvent superpower). It’s going to require more than giving up constant infusions of stocks, Starbucks and Botox.

J-O-B-S

That's one of the centerpieces of the economic rescue plan Obama is announcing right now.  You can read his remarks here.

Oh, By the Way...

...the bailout bill passed the House, and was signed into law by President Bush this afternoon.

I don't know if I should be relieved or terrified.

159,000 Jobs Lost...

...in the month of September. It's the biggest decline in five years.

You can view the official report from the Department of Labor here.

In other economic news, the House of Representatives will vote today on the $700 billion bailout bill that passed the Senate on Wednesday (and failed to pass the House, in an earlier version, last week).

The bailout won't do anything for job creation - which evidently is something we desperately need to focus on - but hopefully it will help solidify the markets and stop everything from exploding into further chaos. From what I've heard, however, it's pretty much a stinker.

Fingers crossed.

The Bill Itself

In case you wanted to take a look at the actual bill (all 450 pages of it), here it is.

The Bailout Passes

Before it passed, I said, "I bet it passes with 3-to-1 support, if not higher."

It passed 74-25.

Ba-zing!

For the record, I don't really know how I feel about this.... because I don't know that much about economics.  Hey, just call me John McCain!

Why It Failed

Nate Silver has a good explanation as to why the bailout failed:

Among 38 incumbent congressmen in races rated "toss-up" or "lean" by Swing State Project, just 8 voted for the bailout as opposed to 30 against: a batting average of .211.

An evil, mean Nancy Pelosi?  No.  A group of politicians worried they won't be re-elected.

The Bailout Fails

So the largest bailout in American history fails to pass the House of Representatives, 228-205.  About 60% of Democrats voted for it, about 75% of Republicans voted against it.

Amazingly, the GOP is blaming the Democrats - and a supposedly mean, partisan speech by Nancy Pelosi - for the failure of the bill.  How does the party that votes "nay" by roughly 2 to 1 blame the OTHER guys for the bill's failure?

What the incident says to me is that there is no leadership among the Republicans in the House, and that apparently John McCain has no sway among his party's congressmen and women.  Remember that it was Mac who rode into Washington last week like a knight in shining armor - "suspending" his campaign in the process - to try to get House Republicans on board with the bailout.  He clearly failed - again - to show any kind of real leadership or responsibility on an urgent matter facing the country.

Paulson Pleads

Just heard this amazing anecdote on CNN Headline News:

At some point within the last 24 hours, Treasury Secretary Hank Paulson actually got down on one knee and begged House Speaker Nancy Pelosi to save the bailout deal.

Pelosi replied, "It's not me that's killing the deal, it's House Republicans."

She's right.