horrible blog posts, 1 and 2

Here and here I take Michelle Russell at her word and compose the most horrible blog post(s) ever. She’s right: to allow yourself to write a horrible blog post has a therapeutic character. I had neglected my humble blog for several months and needed a way back in. Here it is. I should add that I discovered Russell’s post only after I composed and posted my horrible contributions. I take my decision to just start writing combined with Russell’s post as a sign from the dark forces who rule our universe: It is OK to suck.

Why do these posts suck? I write no introductions; I arrive at no general conclusions. I develop no sense of context. Instead I post excerpts of the original text and interpolate comments in the form of enumerated paragraphs. What I produce in both cases are close readings, the lowest form of scholarship. What I hope to do is to gather a set of Obama speeches and remarks over the coming weeks to try to detect patterns in his message formation. The close readings will serve as a basis. Or more likely I will forget this project and move on to another. We shall see.

yours &c.
g.

remarks on Obama’s remarks on the economy dated July 31 2009

I excerpt the following from President Obama’s Remarks on the Economy dated July 31 2009.

Obama:

[...] Now, I realize that none of this is much comfort to those Americans who are still out of work and struggling to make ends meet. And when we receive our monthly jobs report next week, it’s likely to show that we’re still continuing to lose far too many jobs. As far as I’m concerned, we won’t have a recovery as long as we keep losing jobs. And I will not rest until every American who wants a job can find one.

But history does show that you need to have economic growth before you have job growth. And today’s GDP is an important sign that the economy is headed in the right direction and that business investment, which had been plummeting in the last several months, is showing signs of stabilizing. This means that eventually, businesses will start growing and they’ll start hiring again. And that’s when it will truly feel like a recovery to the American people [...]

Various responsa:

(1) Here Obama draws a distinction between the economy as realized in indicators like the gross domestic product (GDP), and the economy as it is experienced by workers, voters, taxpayers.

(2) The problem is jobs. Job losses continue. Obama wants to celebrate the GDP not falling as much as expected even as he acknowledges the experience of people’s pain.

(3) Obama asserts that the one economy predicts the other. When this indicator increases, jobs will increase.

Obama continues:

[...] This won’t happen overnight. As I’ve said before, it took us many more months to fully dig ourselves out of a recession that we now know was even deeper than anyone thought. But I will continue to work every single day and take every step that’s necessary to make sure that happens [...]

(4) Obama counsels patience. Recovery will not happen overnight. But what does Obama mean when he says: “It took us many more months to fully dig ourselves out of a recession that we now know was even deeper than anyone thought?” Is it Obama’s position that the recession is over? Recovery has begun; we only await the its realization? We “fully d[u]g ourselves out?” Or: Did he mean to say that it will take us many more months to fully dig ourselves out of this recession? This would make more sense. But this is not what he said.

Obama continues:

[...] I also intend to make sure that we don’t return to an economy where our growth is based on inflated profits and maxed-out credit cards — because that doesn’t create a lot of jobs [...]

(5) Obama cites maxed-out credit cards and inflated profits as poor job creators. I would argue that maxed-out credit cards are all too effective at creating jobs. Lots of jobs. Lots of probably the wrong kinds of jobs as people invest and position themselves and their organizations to chase dollars that are soon to disappear. But maxed-out credit cards cannot sustain job creation. Bankrupt card-holders are poor consumers. We would prefer that people use credit wisely.

(6) Profit, on the other hand, is not just a job creator, it is the only job creator. There exists no other job creator. No one would smelt precision grade steel or develop a database if he or she consistently lost money to do so. So Obama cannot be against profit without contradicting himself. Earlier he credited business investment with jobs growth; investment only follows the promise of a return, hence: profit.

Rather, Obama opposes “inflated” profit.

But what does “inflated” mean in this context? Money becomes inflated when there is too much of it; prices rise. Could run-away profits increase the money supply? No, this does not seem to follow. So what could Obama possibly mean by “inflated profits?”

Could he mean too much profit? This raises another problem. Efficiency is not just a commercial norm; it is a social goal. Whether public or private, we want all our organizations to perform. We want them all to be good stewards of their capital, assets, and to fairly compensate the workers, employees, and professionals who serve them. We also want effective organizations to prosper. A gross but effective register of performance for commercial organizations is profit. To do less yet get more is not just a good thing. It is the only thing other than bankruptcy. For not-for-profits or government enterprises other metrics may obtain. But the metrics will always be some form of a ratio between money spent and e.g. people served.

Do we really want commercial organizations to profit less? To be less competitive whether domestically or in global markets? Or: how much profit is inflated profit?

Obama continues:

[...] We need a robust growth based on a highly educated, well-trained workforce; health care costs that aren’t dragging down businesses and families; and clean energy jobs and industries. That’s where our future is. And that’s where the jobs are [...]

(8) Here Obama rehearses his 3 policy goals, reform of the education, health care, and energy sectors.

(9) With respect to healthcare, the goal of his reform of the U.S. health care system is to return savings, not support growth. And the savings will be realized not by consumers but in coverage for those currently un- or under-insured. This will return expansion. But the current legislation specifies that hospitals, doctors, those who research and develop pharmaceuticals will be forced to accept less in return for their services even as the insured will need to pay higher taxes or premiums to support the uninsured. This is not expansion so much as redistribution. Redistribution is not an engine of growth. Precisely the opposite is the case. You redistribute e.g. incomes to contain what is perceived by legislators as an unequal rise in incomes. In this case you contain growth and the price inflation that it can occasion to contain the inequality that obtains between the insured and the uninsured.

Where in any other country has health care reform returned growth? Even were I to grant that more people enjoy more access to health care in other developed countries, that would miss the point entirely. The issue for Obama is growth. What he says is that his health care reform proposals will yield growth. Yet what he proposes is the antithesis of growth. It will, by definition, return the opposite of growth.

(10) With respect to education, other than granting new federal subsidies, the character of his reform is unclear. An army of new teachers, he proposes. This may be an admirable social goal in itself. This may support growth in the form of supplying a “highly educated, well-trained workforce.” But absent an analysis of training and education necessary to support current U.S. enterprise, Obama’s proposal assumes the character of massive subsidies for a system already experiencing a massive bubble. This will not return growth. This will return precisely the opposite as fresh subsidies drive up the costs of property taxes and tuitions.

(11) About the energy issue, here is what I wrote elsewhere:

[...] With respect to the energy sector, Obama’s policy goals take the form of cap and trade legislation currently dormant in the U.S. Senate. Cap and trade is a value-add or VAT tax. The theory behind it is this: if we raise the costs of carbon emissions, then renewable sources of energy become cost effective. Further, innovation and investment will follow to drive down the high cost of renewable sources of energy. Hence, a clean energy economy. Hence, green jobs. Even if I were to accept this argument, it does not follow from Obama’s premise that the energy sector stands in want of a productivity revolution. This is the very antithesis of a productivity revolution. This would be to depress a productive sector to release the capital necessary to develop a less productive sector. But to depress the productive sector in advance of the innovation and investment necessary to develop the non-productive sector will result in general price inflation as the cost of everything–food, consumer goods, transportation, housing–goes up.

This legislation may be good for the environment. But it has nothing to do with productivity. The opposite is the case [...]

(12) Is Obama really counseling us to seek careers in education, health care, and the energy sector? That’s where the jobs are? Who will pay the taxes to support these newly subsidized sectors and their newly organized administrative overhead?

I wonder why no one has reported this claim? What are the growth projections in these sectors?

Is it just me or is the U.S. President becoming less coherent even as he becomes more consistent? Can everything—every new development, every social ill, every promise for our future—be linked to energy, education, and health care?

yours &c.
g.

remarks on President Obama’s interview with Business Week’s Adler and Sasseen

In an interview with Business Week’s [BW] Editor-in-Chief Stephen J. Adler, and Washington Bureau Chief Jane Sasseen, U.S. President Obama lays out his theory of a “post-bubble growth model”:

[...] I’ll try to be specific. The last lunch that I had, I guess we had the CEOs of Xerox (XRX), AT&T (T), Honeywell (HON), and Coke (KO). We talked about the fact that, in the 1980s, when everybody was afraid Japan was going to eat our lunch, a lot of companies did a 180 in terms of quality improvement, efficiency, increasing productivity. There was a change in corporate culture that significantly boosted corporate productivity for a long time and helped create the boom of the ’90s [...]

Various responsa:

(1) Obama’s account draws on a familiar fabula. The re-engineering of the 80s passing into the boom of the 90s, a story he embeds it in his account of a lunch with CEOs.

Aside: The CEOs Obama cites were charged for their lunches.

(2) Obama’s narrative of pain passing into prosperity is different from others in that the agents are “companies” who decide on rational grounds to improve quality, efficiency, and productivity. For Obama the story is a celebration of political agency; the problem of a successful competitor is resolved through decisions that pass into policy.

(3) The account that passes into popular culture in films like Stone’s Wall Street (Gordon Gekko) or Marshall’s Pretty Woman (Richard Gere plays a corporate raider who reclaims his soul). Here would be the counter-story to the Obama account: The financial services revolution that begins in the late 70s takes the form of novel financial instruments that allow newly organized capital firms to buy up underperforming and therefore undervalued enterprises. Whether liquidated, down-sized, moved off-shore, or “re-engineered,” the process always released capital and sometimes resulted in more efficient operations. But the social costs to workers and communities were enormous.

(4) This story is not just at odds with Obama’s account. It is the antithesis of Obama’s account. This story is about the evaporation of corporate capital (from equity to debt) as it began to pass into the evaporation of consumer capital (the crash in savings rates), an historical process with no precise agents or agency. This is, therefore, not the story of a post-bubble model of development. This is precisely the opposite of a story about any post-bubble model of development. This is the story of the crash, release of capital, and consolidation that occurs when a bubble bursts.

Back to the President:

[...] What [CEOs] pointed out was, there were a couple of sectors that were resistant to that: health care, education, energy, and government [...]

(5) In Obama’s account other agents or agencies in other sectors resist the trends of rationalization and productivity.

(6) Education and health care are two sectors where the consumers of the service are not the primary payers for the service. Hence prices are inconsistent with the general rate of inflation. College and university administrators raise their tuitions and fees when federal or state governments legislate new subsidies. Public schools spend what local governments budget for them to spend. These two sectors are largely insulated from crash and consolidation. They are not subject to the same immediate market or consumer pressures.

(7) Education and health care are also services. They do not make things. The productivity revolution of the 80s and 90s occurred primarily in manufacturing or in business processes that could be rationalized. An example might be WalMart’s innovations in logistics and supplier-relations. An organization’s efficiency or productivity is a function of what an organization must consume or expend to produce results. The fewer the workers, the less the fixed or circulating capital, the more efficient the organization.

This is not the case in education and healthcare. What would innovation in the delivery of education look like? Distance instruction? A Harvard education for all? I critique that notion here. What would an innovation in the delivery of healthcare look like? Innovations in the business processes that support medical professionals like the standardized electronic records keeping that Obama proposes? Will that return savings? Consider any database. The front-end costs of getting data into any database are enormous.

The irony here is that innovation in the delivery of health care is almost a constant. New technology and new technique enters practical use almost daily. But it does not follow that quality or consumer choice returns lower prices. It can return just the opposite.

(8) The U.S. energy sector since the 1970s has been reduced to a de facto public utility. Domestic production of petroleum is suppressed; refinery capacity remains what it has been for 30 years. Efficiency gains in the discovery, delivery, and use of energy have followed the price curve. There has been almost no investment in nuclear power since the 1970s. The story of the U.S. energy sector has been one of cheap oil from the supply shock of the 1970s to the more recent supply shock.

(9) Obama includes Government in his list of sectors that resist the trend toward productivity. But Obama has made no move nor has he announced any plan to rationalize the delivery of Government services, reform existing entitlements, eliminate un- or under-performing agencies. This is where Obama could probably recruit bi-partisan support.

Back to the President:

[...] And so if you think about the problem that we’re now trying to solve, we’ve stopped the bleeding, the economy is stabilized. There’s this huge deleveraging taking place, both at the consumer level and among businesses, and, ultimately, government’s going to have to do the same thing. We’re not going to be able to drive the next big stretch of economic growth through debt [...]

(10) How does Obama propose to deleverage the U.S. government?

[...] So what is that model of a post-bubble economy? What we’ve tried to say is that there are some foundations, some pillars that have to be in place in order for that next round of growth to take off. This is not to pick winners and losers and be able to predict exactly, in detail, which companies are going to be successful and which aren’t. This is always the straw man that gets put up there when you hear about government being involved in the economy. That’s not what we’re talking about [...]

(11) Obama’s pillars include energy, health care, and education. I wonder who is arguing that Obama wants to pick winners and losers?

[What we're saying] matches up almost perfectly with what those CEOs were saying: Can we introduce the same sort of productivity in the health-care industry, which we know is going to be a growing sector because of the aging population? Can we use the need to transition our energy economy in such a way that it ends up being a huge engine for economic growth? Can we revamp our education system so that it’s producing the kind of workers we need? And then can we make government sufficiently efficient so that it not only is delivering good services for taxpayer dollars but also regains credibility? Because in the 21st century economy, a lean, mean, but effective government is going to be important. And we need to get beyond this notion that somehow government is always just the problem [...]

(12) With respect to health care, Obama asks if we can introduce the same sort of productivity that obtains in other sectors. We probably can. At least with respect to business processes like record keeping. Will this return significant savings? Probably not. Hospital managers and administrators attempt to eke out savings where they can every day. The price pressures on health care consist not in administrative costs but in the price of highly skilled practitioners, the tools that they use, and, significantly, the insurance they must carry.

But this misses the point. The savings that Obama wants will not be realized by the consumer; it will be used to cover the uninsured. This is the core contradiction of health care reform as proposed. The sector is accused of fraud, waste, and abuse; the goal, however, is universal coverage. One does not follow from the other.

(13) With respect to the energy sector, Obama’s policy goals take the form of cap and trade legislation currently dormant in the U.S. Senate. Cap and trade is a value-add or VAT tax. The theory behind it is this: if we raise the costs of carbon emissions, then renewable sources of energy become cost effective. Further, innovation and investment will follow to drive down the high cost of renewable sources of energy. Hence, a clean energy economy. Hence, green jobs. Even if I were to accept this argument, it does not follow from Obama’s premise that the energy sector stands in want of a productivity revolution. This is the very antithesis of a productivity revolution. This would be to depress a productive sector to release the capital necessary to develop a less productive sector. But to depress the productive sector in advance of the innovation and investment necessary to develop the non-productive sector will result in general price inflation as the cost of everything–food, consumer goods, transportation, housing–goes up.

This legislation may be good for the environment. But it has nothing to do with productivity. The opposite is the case.

(14) About education. What has Obama proposed to make the sector more productive; to use less to produce more? To drive down the property taxes that fund public schools or the tuitions for private schools, colleges, and universities? What does producing more even mean in this case? What Obama has proposed is further investment, further subsidy. As I argue in (6) and here it is the subsidies themselves that drives up costs.

[...] And so I actually think that some of these conversations that I have with corporate leaders, as well as with small business leaders, there’s a real recognition of, rather than be bogged down in the old ideological debates, the whole question is how do we create a smarter economy? And if we don’t do that, then we’re going to be limping along with unsatisfactory growth rates for a pretty long period of time [...]

(15) How do we create a smarter economy? How do we create an economy at all? We buy and sell goods and services. In the process we negotiate value. Productivity can return lower prices. It can also return higher quality while prices remain stable. But productivity does not return growth; it returns intensity and not without cost in terms of displaced workers or the liquidation of un- or under-performing organizations. It is innovation that returns growth in the form of new products or services. But it does so at a high social cost as even high-performing actors get liquidated. This is the story of the 1980s. Innovation in the form of novel financial instruments used to re-organize or liquidate un- or under-performing organizations.

(16) It is ironic that Obama would cite this era as his model.

It is ironic in that he does not propose to allow un- or under-performing organizations to be liquidated as would be the case if the question were one of productivity; rather, he proposes the opposite, broad expansion in education, health care, and in renewable sources of energy.

It is ironic in that he imagines that the productivity gains of the 80s and 90s to have been the result of rational deliberation among an elite of corporate actors (CEOs, presumably, since it is in the context of a lunch with CEOs that the story arises) as opposed to market and historical forces that none of the elites of the era anticipated. (Compare how well the elites of our own era anticipated the recent crash and financial de-globalization.)

It is ironic in that while his energy sector legislation comprehends the economic activity of innovation, it turns the process upside down. With cap and trade it is not innovation that drives growth; it is “growth” in the form of supressing a productive sector to subsidize an under-performing sector that will return imagined innovation. Is there any historical precedent for this upside down model of development?

yours &c.,
g.

question: how will this downturn’s religious ferment differ from the last? (I don’t have an answer)

An Evangelical imagines the end of his movement:

[...] “Oneida, Ky. – We are on the verge – within 10 years – of a major collapse of evangelical Christianity,” prophesies Michael Spencer in a www.csmonitor.com release titled The coming evangelical collapse; An anti-Christian chapter in Western history is about to begin. But out of the ruins, a new vitality and integrity will rise.

Spencer continues:

This breakdown will follow the deterioration of the mainline Protestant world and it will fundamentally alter the religious and cultural environment in the West.

Within two generations, evangelicalism will be a house deserted of half its occupants. (Between 25 and 35 percent of Americans today are Evangelicals.) In the “Protestant” 20th century, Evangelicals flourished. But they will soon be living in a very secular and religiously antagonistic 21st century.

This collapse will herald the arrival of an anti-Christian chapter of the post-Christian West. Intolerance of Christianity will rise to levels many of us have not believed possible in our lifetimes, and public policy will become hostile toward evangelical Christianity, seeing it as the opponent of the common good.

Millions of Evangelicals will quit. Thousands of ministries will end. Christian media will be reduced, if not eliminated. Many Christian schools will go into rapid decline. I’m convinced the grace and mission of God will reach to the ends of the earth. But the end of evangelicalism as we know it is close [...]

Spencer’s jeremiad follows the narrative arc of apocalyptic literatures in general. A minority expresses a consciousness of the loss of, or of a threat to, its special character against a dominant culture in terms of judgment, destruction, and the promise of renewal for a remnant. Here would be the prophecy of another Evangelical:

[...] “A respected pastor, best-selling author and founder of a major ministry to teens predicts an imminent “earth-shattering calamity” centered in New York City that will spread to major urban areas across the country and around the world – part of what he sees as a judgment from God,” reports the World Net Daily in a story titled Famed pastor predicts imminent catastrophe; Best-selling author, Teen Challenge founder, sees ‘earth-shattering calamity about to happen’

The World Net Daily story continues:

David Wilkerson, author of “The Cross and the Switchblade,” a book about his ministry to troubled New York street kids that was later made into a movie starring Pat Boone, tells readers of his blog this weekend that he is “compelled by the Holy Spirit to send out an urgent message” about his prediction.

“An earth-shattering calamity is about to happen,” he writes. “It is going to be so frightening, we are all going to tremble – even the godliest among us.”

Wilkerson’s vision is of fires raging through New York City [...]

New York City? Could it be the Wilkerson’s vision represents the fire that hit Wall Street and the world financial community? [...] “The value of global financial assets including stocks, bonds and currencies probably fell by more than $50 trillion in 2008, equivalent to a year of world gross domestic product, according to an Asian Development Bank report,” as reported by Shamin Adam, in a  www.bloomberg.com release titled Global Financial Assets Lost $50 Trillion Last Year, ADB Says. No, probably not. Wilkerson didn’t mention any whores of Babylon or the marks of any beasts, the usual symbols that follow millennialist speculation about global finance. This prediction seems to follow a simple retribution for past excesses arc, a lot like Spencer’s. The seventh angel of the apocalypse is about to roll up the sky like a newspaper and swat New York City with it.

Apocalyptic literatures abound during economic downturns. The energy and food supply shocks of the 1970s brought the U.S. Evangelical movement to political consciousness and doubled its size, an expression of American revivalism that begins with the Great Awakening. The late 70s were also a period of intense millennialist speculation. In this particular disaster-contraction we can probably expect the ranks of believers to multiply— again. We can probably expect that the expression and propagation of their views will take extreme forms. Spencer is certainly right about the Evangelical movement in its present form. He is right only in the sense that he cannot be wrong. The Evangelical movement is an historical artifact. It passed into history at a certain point and in response to particular social and material conditions; it will pass back out again. But he is flat wrong if he believes that U.S. society will finally purge its public life of believers of whatever sort. History would predict otherwise.

On the other hand, history never repeats itself. Not exactly anyway. More often it riffs on and spoofs itself. Or it inverts its earlier themes. In classical antiquity periods of stress occasioned bouts of antiquarianism. Temples would suddenly appear in archaic styles. The high priest Hilkiah suddenly “finds” and introduces “the book of the Law” into King Josiah’s court. Livy in his War with Hannibal describes despairing Roman elites poring over ancient prophecies or reviving ancient rites. The famines, contagions, and social dislocations of the medieval era occasioned pilgrimage and crusade manias, outbreaks of mass flagellation, massacres of the Jews, and various mass dance manias. The reformation and its print-based communication networks put a stop to all that by introducing political and social revolution. This begins with Cromwell and his Puritan Republic and continues in various forms to this day.

My question would be this: How will this downturn’s religious ferment differ from the last? In the last the Evangelicals purchased time on newly developed cable television networks. They also distributed their messages on cassette tapes, which is how the exiled cleric, the Ayatollah Khomeini, propagated his message in Shah Pahlavi’s Iran. In the 1930s figures like Aimee Semple Mcpherson or Father Coughlin rose up and began to use radio. What will happen now? And who will the new players be? What will be their positions with respect to civil society, the state, the nation, and the world. The principle is this: prosperity and continuity supports secularism. Disaster and contraction, on the other hand, calls many of our brothers and sisters to fervent prayer.

But, really? Should we be panic? Careful, calm, competent, pragmatic, reflective, post-partisan—the Spencers and the Wilkersons can at least take solace in the newly installed leadership in the U.S. White House. Right?

[...] “Sources close to the White House say Mr Obama and his staff have been ‘overwhelmed’ by the economic meltdown and have voiced concerns that the new president is not getting enough rest,” writes Tim Shipman for www.telegraph.co.uk in a story titled Barack Obama ‘too tired’ to give proper welcome to Gordon Brown

Shipman continues:

[...] A well-connected Washington figure, who is close to members of Mr Obama’s inner circle, expressed concern that Mr Obama had failed so far to “even fake an interest in foreign policy” [...]

[...] The Sunday Telegraph understands that one of Mr Obama’s most prominent African American backers, whose endorsement he spent two years cultivating, has told friends that he detects a weakness in MrObama’s character [...]

[...] “The one real serious flaw I see in Barack Obama is that he thinks he can manage all this,” the well-known figure told a Washington official, who spoke to this newspaper. “He’s underestimating the flood of things that will hit his desk.” A Democratic strategist, who is friends with several senior White House aides, revealed that the president has regularly appeared worn out and drawn during evening work sessions with senior staff in the West Wing and has been forced to make decisions more quickly than he is comfortable [...]

[...] He said that on several occasions the president has had to hurry back from eating dinner with his family in the residence and then tucking his daughters in to bed, to conduct urgent government business. Matters are not helped by the pledge to give up smoking [...]

[...] “People say he looks tired more often than they’re used to,” the strategist said. “He’s still calm, but there have been flashes of irritation when he thinks he’s being pushed to make a decision sooner than he wants to make it. He looks like he needs a cigarette” [...]

So, let’s take inventory, shall we? Sources close to the White House aver that new U.S. president is “overwhelmed” by events. He is fatigued, deprived of sleep, and suddenly turning gray. All presidents age precipitously when in office. But usually not after 5 short weeks into their first term. Worse: Events are pushing him to make decisions sooner than he would like. If Wilkerson had said Washington D.C. instead of New York City, I would punch his prayer line number into my speed dial. My long-suffering rabbi would not be pleased of course. Any port in a storm, as they say. Joking aside, the new president now confronts an electorate the character of which will change profoundly and rapidly in relation to the economic crisis, and probably not in favour of the secularists.

yours &c.
g.

presidential advice: buy stock, don’t hoard cash, trust your banks and financial institutions

In a contribution titled the gathering reaction (ii) I wrote about President Obama’s suddenly polarizing language. The President’s tone has changed—again. It is not hard to understand why.

[...] “The Dow Jones Industrial Average fell 20 percent since Inauguration Day through yesterday, the fastest drop under a newly elected president in at least 90 years, according to data compiled by Bloomberg,” writes Eric Martin in a www.bloomberg.com release titled ‘Obama Bear Market’ Punishes Investors as Dow Slumps (Update3)

Martin continues:

The gauge lost 53 percent from its October 2007 record of 14,164.53, slipping 4.1 percent to 6,594.44 yesterday [...]

The capital markets are in a free fall—still. With every passing hour it becomes more difficult for the president to argue that he is not responsible for the hemorrhaging—of course he is not responsible—how could he be?—this is not the point, this not anyone’s point—but to paraphrase our sages of blessed memory, President Obama may not be obligated to complete the work, but neither is he permitted to walk away from it even if he is not responsible for it. What he appears to want to do is to walk away from it so that he can focus on what he does care about, energy, education, and health care.

[...] “Rather than pitch ahead to his next message, Obama devoted his address to recapping what his team did this past week to help get people working and spending,” writes Ben Feller in an Associated Press story titled Obama: Time of crisis can be ‘great opportunity’

The President needs to stop issuing his “crisis-opportunity” theme immediately. It is beginning to sound like our crisis is the President’s opportunity. Feller continues:

The goal was to demonstrate that the administration is on the case and, more broadly, that history shows American resilience will win.

“We’ve experienced great trials before,” Obama said. “And with every test, each generation has found the capacity to not only endure, but to prosper – to discover great opportunity in the midst of great crisis. That is what we can and must do today. And I am absolutely confident that is what we will do.”

The echoes of history emerge often as Obama seeks a balance between the practical language of governing and the oratory meant to keep people inspired. Just a few days earlier, he promoted new transportation plans by saying the nation built itself up before, during the Civil War and the Great Depression.

Recent efforts include a more detailed plan to help struggling homeowners avoid foreclosure; another plan to spur lending for people and businesses; an overhaul of the way the government hands out private contracts to reduce waste; and a summit on how to overhaul health care.

He defended his budget proposal, whacked Wall Street “accounting tricks” and sent a message to Congress that it must make some tough choices.

Separately, the president offered advice to people struggling to pay their bills. He told The New York Times that people should be prudent and get back to fundamentals, with an eye on steady savings, reasonable returns and long-term investing.

“What I don’t think people should do is suddenly stuff money in their mattresses and pull back completely from spending,” Obama told the newspaper in an interview posted on its Web site Saturday. “I don’t think that people should be fearful about our future. I don’t think that people should suddenly mistrust all of our financial institutions because the overwhelming majority of them actually have managed things reasonably well.”[...]

Similarly:

[...] “In a 35-minute conversation with The New York Times aboard Air Force One on Friday, Mr. Obama reviewed the challenges to his young administration,” write Helene Cooper with the apt and able assistance of the under appreciated Sheryl Gay Stolberg in a NYT story titled, strangely, Obama Ponders Outreach to Elements of the Taliban.

The credulous duo of Cooper and Stolberg continue:

The president said he could not assure Americans the economy would begin growing again this year. But he pledged that he would “get all the pillars in place for recovery this year” and urged Americans not to “stuff money in their mattresses.”

“I don’t think that people should be fearful about our future,” he said. “I don’t think that people should suddenly mistrust all of our financial institutions” [...]

Various responsa:

(1) Cooper and Stolberg of the NYT describe the president as “exhibit[ing] confidence six weeks into his presidency despite the economic turmoil around the globe and the deteriorating situations in Afghanistan and Pakistan.” [President Obama], they continue, “struck a reassuring tone about the economy, saying he had no trouble sleeping at night.” President Obama has no trouble sleeping at night? Good for him I suppose. A lot of people in North American aren’t sleeping all that well. But even if the president seems confident at his desk in his shirtsleeves according to Cooper and Stolberg, even if he speaks in a reassuring tone, and even if he does “sleep well at night” as he claims, his line has become defensive. By line I mean his view of the situation and his evaluation of the players as expressed in his language. By this I mean that though the president himself may or may not remain confident—neither I nor Cooper and Stolberg enjoy privileged access to the heart of the U.S. President—his line of reasoning acknowledges the grim reality that a lot of people around him no longer are.

(2) Example: the president is now reduced to giving people stock market tips based his analysis of the “profit and earnings ratio,” this according to Jake Tapper of the Political Punch blog. The president is further reduced to advising “people struggling to pay their bills [...] [to] be prudent and get back to fundamentals, with an eye on steady savings, reasonable returns and long-term investing,” according to Ben Feller quoted above. Most bizarre is his advice not to hide our money in mattresses and to trust our financial institutions—this when Bankers themselves have asked President Obama to stop trashing them in his speeches, this after President Obama warned us of an economic “catastrophe” if Americans failed to support his stimulus plan.

The president locates our travails not in our objective experience of our jobs getting cut or the prices of our homes crashing or of our savings disappearing, but in our heads.

This is risible on its face—insulting, even. But it speaks to a deeper issue.

(3) My highly speculative surmise: President Obama’s understanding of the core principles of presidential power in the U.S. system at this stage in its historical development is at odds with popular expectation formed over the past 40 or so years. President Obama behaves not like an executive or an administrator, but rather like a super-legislator. The basis of his power as he imagines it is not the federal government and his administrative role at the center of it. Rather: he imagines that it is Congress, as if the U.S. hosted a parliamentary sytem. President Obama’s instincts—his habits of mind—are those of a legislator, not an executive. Only the U.S. doesn’t host a parliamentary system, and the president is not a super-legislator or a tribune of the people but rather the chief executive, and this is precisely where he is failing. You can hear it in the voices of his spokespeople dispatched to answer for his actions on the various news shows. When asked about directions or changes or accomplishments they invariably talk about pending bills and past legislation.

(4) One example of President Obama’s understanding of his own role would be the ineffectiveness of his vetting process and his failure to seat a cabinet five weeks into his presidency, a primary administrative function. We all know about the tax evaders that got heaved under the bus. Less is known about  Ambassador Chas Freeman, one of President Obama’s top level appointees, a man who was recently on the House of Saud’s payroll and who famously believes that the Chinese were only culpable in the Tiananmen Square Massacre to the degree that they did not “nip [the student protest] in the bud” immediately, and with brute force, and a man who was apparently never vetted. Or how do you account for this? Why has this botched appointment not been tossed under a bus yet?

(5) Another example would be President Obama’s failure to effectively address the banking crisis—a crisis that requires executive leadership to produce an executive solution. [...] “Why do officials keep offering plans that nobody else finds credible?”—asks Nobel Prize Laureate Paul Krugman in a NYTimes.com editorial titled The Big Dither.

Krugman continues:

Because somehow, top officials in the Obama administration and at the Federal Reserve have convinced themselves that troubled assets, often referred to these days as “toxic waste,” are really worth much more than anyone is actually willing to pay for them — and that if these assets were properly priced, all our troubles would go away.

Thus, in a recent interview Tim Geithner, the Treasury secretary, tried to make a distinction between the “basic inherent economic value” of troubled assets and the “artificially depressed value” that those assets command right now. In recent transactions, even AAA-rated mortgage-backed securities have sold for less than 40 cents on the dollar, but Mr. Geithner seems to think they’re worth much, much more.

And the government’s job, he declared, is to “provide the financing to help get those markets working,” pushing the price of toxic waste up to where it ought to be [...]

What the esteemed Nobel Prize Laureate does not seem to get is that the question of how the U.S. disposes of its failing banks is, as of August of 2007, a foreign policy issue. This is when sovereign wealth funds bailed out U.S. banks. No one seemed to notice at the time. And only a few seem to understand it now. [...] “China for example has made it clear that it hopes that the US will protect at least some of its investments from the risk of losses,” writes Brad Stetser in a Follow the Money Blog blog burst titled Unintended Irony.

China’s Vice Premier Wang Qishan told Hank Paulson:

“We hope the US side will . . . guarantee the safety of China’s assets and investments in the US”

He may have just been thinking of the Agencies … but he also may have had a few of China’s other large stakes in mind. The classic response is that the only investment that is guaranteed by the full faith and credit of the United States government is a Treasury bond.

Yet, it increasingly looks like the US is inching toward severely diluting the common equity of a set of banks where sovereign funds have substantial stakes,* if not wiping out the existing equity entirely. That potentially — as Larry Summers warned in a former life — is a foreign policy issue [...]

Put simply, the sovereign wealth funds who lost big when they bought up U.S. equities right before everything crashed—e.g. China—now demand to be made whole at the expense of the U.S. taxpayer. Were the U.S. to nationalize its banks the shareholders would get nothing. The problem for the U.S. is that the same sovereign wealth funds who own so much of our failing banks are also the principal buyers of U.S. debt—these are the only institutions with liquidity enough left to buy U.S. Treasury Bills. This would be a painful needle to thread for any president. This president, however, doesn’t even seem to care. What matters to him is energy, education, and health care.

He regards our crisis as his “opportunity.”

Besides, none of this began on his “watch.”

He can sleep well at night.

(6) [...] “WASHINGTON (AP) — President Barack Obama offered his domestic-policy proposals as a ‘break from a troubled past,’” writes Tom Raum in an Associated Press editorial titled Analysis: Obama’s ambitious plans raise questions.

Raum continues: 

But the economic outlook now is more troubled than it was even in January, despite Obama’s bold rhetoric and commitment of more trillions of dollars.

And while his personal popularity remains high, some economists and lawmakers are beginning to question whether Obama’s agenda of increased government activism is helping, or hurting, by sowing uncertainty among businesses, investors and consumers that could prolong the recession.

Although the administration likes to say it “inherited” the recession and trillion-dollar deficits, the economic wreckage has worsened on Obama’s still-young watch.

Every day, the economy is becoming more and more an Obama economy [...]

President Obama’s position is deteriorating rapidly. He still enjoys favourable poll numbers. But he has already lost the confidence of the business community, the Republicans who put their hope him, and even moderate members of his own party. Here is where the story gets interesting. President Obama has never faced an adversarial press before—this is probably why Secretary Gibbs and the Obama White House in general obsess about contrary views when they appear in the press (NYTimes columnist David Brooks descended upon by “Obamatons” would be a good example ). He has never faced a determined ideological adversary except for the inept and deeply compromised McCain campaign. He has never held a managerial, an administrative, or an executive post of any kind, ever. He edited a prestigious law journal but never published a peer reviewed article. He was a partner in a boutique law firm but was never attached to a significant case. He was a legislator at the state and national level but attached himself to no significant issue nor legislation. Now he finds himself in the top executive position in the U.S. in the midst of a crisis that rivals the Great Depression.

Our tentative conclusion: history did not prepare this man for this moment. It’s beginning to show. He may well rise to the occasion. But he hasn’t done it yet. Nor has he given us any indication of how he would do it if he could.

yours &c.
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the gathering reaction (ii)

Problems too often shade off into complexity. Problems must be bounded and defined before they can be addressed on rational grounds. At this point they pass into issues and constituencies organize themselves. But this takes time. And it takes concerted effort. An example would be the banking crisis. At the moment it hardly rises to the dignity of a problem. It seems more like an ill-defined source of fear and pain. One of the many questions about the banking crisis is whether to nationalize the big U.S. banks. Only the question itself shades off into grades that resist clear decision points—e.g. Wolf’s assessment in the Financial Times. So popular attitudes remain unformed. They reduce to fear or ignorance. (Another question: who is responsible for the GM pensions, or any of the many other suddenly under-capitalized private pension plans? Will it be the U.S. taxpayer again?)

An enemy or enemies, on the other hand, is a concrete entity with a will and intentions. It poses a threat. It commands attention. It can organize an aimless rabble into a concerted opposition. Further, it creates drama as it passes into a narrative. Hence labour organizers, pulpit exhorters, and politicians will move us by polarizing us, us against them.

[...] “‘I know these steps won’t sit well with the special interests and lobbyists who are invested in the old way of doing business, and I know they’re gearing up for a fight as we speak,’ Obama said in his weekly radio address Saturday,” writes Johathan Martin in a www.politico.com release titled Obama ‘gearing up for a fight’

Martin continues:

“My message to them is this: So am I.”

It’s a return to the sort of rhetoric he deployed in his anti-status-quo presidential campaign, and it reflects the pivot Obama has made since spending his first few weeks in office reaching for bipartisan consensus.

Having faced almost unanimous Republican opposition to his stimulus plan, the president is now embracing confrontation over conciliation. Republicans already are tagging him with the “tax and spend” label, for his proposed $1.3 trillion in higher taxes over 10 years and broad expansion of a government role in health care and other areas.

But Obama made clear he doesn’t consider it merely a partisan fight, taking on some of the capital’s most politically muscular groups in some of his most pugilistic rhetoric, a preview of battles ahead.

“I know that the insurance industry won’t like the idea that they’ll have to bid competitively to continue offering Medicare coverage, but that’s how we’ll help preserve and protect Medicare and lower health care costs for American families,” he said.

“I know that banks and big student lenders won’t like the idea that we’re ending their huge taxpayer subsidies, but that’s how we’ll save taxpayers nearly $50 billion and make college more affordable. I know that oil and gas companies won’t like us ending nearly $30 billion in tax breaks, but that’s how we’ll help fund a renewable energy economy that will create new jobs and new industries.”

It’s a strategy undergirded by the poll-reinforced assumption that Americans are inclined to side with the popular new president over not only the weakened GOP but also entrenched interest groups [...]

U.S. Treasury Secretary Timothy Geithner—a man who at the moment stands alone as he has yet to seat a single one of his 17 deputies—follows a similar path, attacking the oil industry to defend the President’s plan to end subsidies, as reported by Tom Doggett for Reuters. I just wish he had something intelligent, or even intelligible, to say about the banks. Where is the enemy there, Tim? Is it the executives and top managers whose jobs you are saving with taxpayer dollars even as many other Americans lose theirs?

Another prong of the Obama White House’s information offensive has been a coordinated effort to link Republican opposition to Rush Limbaugh, a syndicated radio commentator in the U.S.

[...] “The seeds were planted in October after Democracy Corps, the Democratic polling company run by Carville and Greenberg, included Limbaugh’s name in a survey and found that many Americans just don’t like him,” writes Jonathan Martin in a www.politico.com release titled Rush Job: Inside Dem’s Limbaugh Plan.

Martin continues:

“His positives for voters under 40 was 11 percent,” Carville recalled with a degree of amazement, alluding to a question about whether voters had a positive or negative view of the talk show host.

Paul Begala, a close friend of Carville, Greenberg and White House Chief of Staff Rahm Emanuel, said they found Limbaugh’s overall ratings were even lower than the Rev. Jeremiah Wright, Obama’s controversial former pastor, and William Ayers, the domestic terrorist and Chicago resident who Republicans sought to tie to Obama during the campaign [...]

[...] “So far, Obama’s attack machine — and there’s no other term for it — has mostly succeeded,” writes the author of the Hot Air blog in a blog burst titled Hope and Change: The Operation Rushbo Distraction .

Hot Air continues:

While the markets have lost 18% of their value in the six weeks of his leadership, all Democrats can talk about is Rush.  Newspapers and media have followed suit, and so have the blogs.  Usually excellent sites like The Moderate Voice and Political Machine have turned themselves into almost nothing but anti-Limbaugh sites, where Jazz Shaw’s light satire of the trend gets completely subsumed in the overwhelming focus on someone who has no direct power on policy or enforcement. Instead of focusing attention on the real policy leaders in Washington — all Democrats — whose every move has received a resounding vote of no confidence from investors, they have allowed themselves to get distracted by a deliberate strategy of misdirection originating in the highest levels of the White House.

It’s reminiscent of Nixon’s enemies list, and it comes from the supposed messiah of Hope and Change [...]

The emphasis is mine. (To be honest, I was baffled by the sudden and intense interest in Rush Limbaugh from voices of the U.S. center left even as markets fell and institutions failed.) Here is the problem for the White House. Whenever you bring two unequal terms into comparison, you elevate the inferior and lower the superior—here I am paraphrasing Perelman from his Realm of Rhetoric. For the White House to try to discredit a radio personality immediately suggests that the White House is obsessed about the trivial and that the radio personality is powerful enough to command the attention of the top office in the U.S. government. If you are the president, the top official in the entire U.S., you need to be exceedingly careful who you call out. You immediately raise the dignity of your target and lower your own.

Now you have Limbaugh challenging the President to a debate—and why not?—if the President cares that much about Limbaugh, and he honestly believes that Limbaugh represents his opposition, then the new president should debate him. But this is not the case. This is an attempt to discredit Republican legislators. Now that “Operation Rushbo” has been exposed the attempt itself has become the story—as anyone with any sense would have predicted. The story has passed from Limbaugh’s influence over the GOP to the White House’s concerted effort to link Limbaugh to the GOP leadership, an attempt that the White House itself is now forced to comment on. The White House Press Secretary has been forced to admit that the entire imbroglio is counter-productive , and it is, although it may have been “fun” as Gibbs now claims. Yes, but was it effective, Mr. Secretary? Did calling out media personalities cast the White House or its policies in the best possible light?

Early in his presidency Clinton made the same mistake. In the end he apologized to Limbaugh because of a joke he told that implied that Limbaugh was a racist. Another media personality who has called out Obama and gotten instant attention from the White House in return is Jim Cramer of CNBC.

[...] “Jim Cramer leads the other flank against Obamanomics,” writes Dave Shrugged in a Forbes.com Digital Rules blog burst titled Two Front War Against Obamanomics.

“This battle is shaping up as an internecine fight among Democrats,” Shrugged continues. Cramer speaks for the pro-growth wing of the party, the party of JFK and Bill Clinton:

Shrugged quotes Cramer as saying “I believe [Obama’s] agenda is crushing nest eggs around the nation in loud ways, like the decline in the averages, and in soft but dangerous ways, like in the annuities that can’t be paid and the insurance benefits that will be challenging to deliver on [...]

The real problem for the new president comes not from media personalities who get to enjoy sudden and intense national attention by simply being critical of the president, however. Nor does it come from Republicans. It comes from the new president’s own flanks. Democrats, particularly moderates, are breaking ranks, both in the House, as reported by Alan K.Ota of CQ Politics in a story titled Democratic Revolt May Slow Obama Agenda, and in the Senate, in the form of a Senator who campaigned with Obama and was once considered a front runner for Obama’s VP slot, as argued by Senator Evan Bayh himself in a Wall Street Journal editorial titled Deficits and Fiscal Credibility , and subtitled A Democratic Senator says no to a huge federal spending bill. Question: How will the new president treat his own dissidents and dissenters?

In a post titled the gathering reaction I wrote:

[...] The lesson: The test of the Obama administration lies not in what it can do or accomplish. The test lies in how it manages the reaction to what it does or what it accomplishes. This is a test that the two Bush administrations failed despite what they would point to as their accomplishments. The Clinton administration famously passed this test despite its failures and costly setbacks. When their overreach resulted in the loss of 2 houses of Congress, they adapted and largely prevailed [...]

yours &c.
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signs of the end times

“Dow drops below 7,000 for first time since 1997,” writes Tim Paradis, AP Business Writer.

Paradis continues:

Dow breaks 7,000 for first time since ‘97 as AIG gets more gov’t funding, posts $61.7B loss [...]

The market has lost half its value since its high of 14,000 in October 2007. Meanwhile, governors of bankrupt U.S. states form a conga line at a posh White House soiree, as reported by Darlene Superville in an Associated Press release titled Obama kicks up White House entertaining.

yours &c.
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What does President Obama have in common with a German Anti-Globalization Campaigner?

[...] “Anger rises in Germany as the economy falls,” writes someone, I’m not sure who, in a Spiegel interview titled ‘We’re Not Paying For Your Crisis!’ and subtitled GERMAN ANTI-GLOBALIZATION CAMPAIGNER.

The interview continues:

Trade unions and globalization-critical protesters are planning demonstrations in Berlin and Frankfurt under the banner: “We’re not paying for your crisis.” Alexis Passadakis, 31, an activist from the group Attac, tells SPIEGEL what’s wrong with the system.

Passadakis: We believe that the cost of the economic crisis should be footed by those who profited most from globalization.

SPIEGEL: As a leading exporter, Germany too has profited.

Passadakis: No, the majority of people have not earned much from the boom — instead they have had to deal with restraint in their wage agreements. The rich, on the other hand, have seen strong increases in their wealth. So it is only fair that they should pay extra duties.

SPIEGEL: You want to fleece the Aldi brothers and the Klatten and Otto families (Germany’s richest people) among others?

Passadakis: Yes, they in particular should be ordered to come to the check out. We are calling for the rich to pay out between 5 and 20 percent of their wealth [...]

Passadakis’ reasoning takes the form of a classic enthymeme:

(a) The majority of people have not earned much from the boom — instead they have had to deal with restraint in their wage agreements.

(b) The rich, on the other hand, have seen strong increases in their wealth.

(c) So [therefore, thus, in conclusion] it is only fair that they should pay extra duties.

Passadakis is a German Anti-Globalization Campaigner. So what does he have in common with President Obama? President Obama advanced the same “rich must pay more because they profited more” enthymeme both in his budget and his address this week.

[....] “While Obama’s proposed budget will hit Bush hard in the wallet, just like other wealthy Americans, the main blow may be aimed at his reputation,” writes John Ward Anderson in a Politico release titled Budget Winners and Losers.

The 134-page spending plan opens with a 10-page preamble entitled “Inheriting a Legacy of Misplaced Priorities” that lays blame for many of today’s problems at the doorstep of the former president.

“It is no coincidence that the policy failures of the past eight years have been accompanied by unprecedented Governmental secrecy and unprecedented access by lobbyists and the well-connected to policymakers in Washington. Consequently, the needs of those in the room trump those of their fellow citizens,” the plan says.

But others get blamed in a broad-brush condemnation: “For the better part of three decades, a disproportionate share of the Nation’s wealth has been accumulated by the very wealthy,” the budget says. It blasts “a legacy of irresponsibility,” adding, “It’s our responsibility to change it” [...]

Note the enthymeme:

“For the better part of three decades, a disproportionate share of the Nation’s wealth has been accumulated by the very wealthy.”

[Therefore]

“It’s our responsibility to change it” [by means of policy]

The policies expounded in the Obama budget are not about recovery so much as redress for a grievance. It is the same grievance that Passadakis asserts. The language of the budget itself makes that clear. In my remarks on the President’s un-official State of the Union addressed delivered last Tuesday I wrote about the same issue and the contradiction it shows up in President Obama’s policies:

[...] Another tension that begins here [in the President's prooemium] but develops later is between the deserving and the undeserving. The tension begins here in the form of people losing jobs or opportunities and those who took “quick profits” or bought “homes they knew they could not afford from banks and lenders who pushed those bad loans anyway.” The problem is that Obama’s proposals reward, protect, and fund with taxpayer dollars the quick profit takers. So Obama is forced to issue a meaningless qualifications like this:

[...] [W]e have launched a housing plan that will help responsible families facing the threat of foreclosure lower their monthly payments and refinance their mortgages. It’s a plan that won’t help speculators or that neighbor down the street who bought a house he could never hope to afford [...]

Or this:

[...] So I know how unpopular it is to be seen as helping banks right now, especially when everyone is suffering in part from their bad decisions. I promise you – I get it.

But I also know that in a time of crisis, we cannot afford to govern out of anger, or yield to the politics of the moment. My job – our job – is to solve the problem. Our job is to govern with a sense of responsibility. I will not spend a single penny for the purpose of rewarding a single Wall Street executive, but I will do whatever it takes to help the small business that can’t pay its workers or the family that has saved and still can’t get a mortgage [...]

Or this:

[...] As for our auto industry, everyone recognizes that years of bad decision-making and a global recession have pushed our automakers to the brink. We should not, and will not, protect them from their own bad practices. But we are committed to the goal of a re-tooled, re-imagined auto industry that can compete and win. Millions of jobs depend on it. Scores of communities depend on it. And I believe the nation that invented the automobile cannot walk away from it [...]

The emphases are mine. The tension between the deserving and the undeserving remains under-developed and unresolved. Few would disagree that we need to look forward. Few would disagree that the public good should be prior to private interest. But as I wrote a million years ago in a post titled the gathering reaction, this is a tension that will continue to develop apace. It will develop apace because it is grounded in a core contradiction of Obama’s project. The very basis of US prosperity for the past 30 years was a credit bubble financed by trade and capital flows that are no longer sustainable. Yet Obama’s housing, automobile industry, and financial sector bailout plan are based on the same assumptions that grounded nearly 20 years of asset inflation [...]

Here is the problem. You cannot divide the world into the deserving and the undeserving based on so gross a category as class. It won’t stand. At least not for long. Especially when the winners and the losers in the budget you propose fall along different lines.

yours &c.
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history accelerates: can the U.S. service its debt?—U.S. treasuries fall for third day

On Tuesday of this week the U.S. president addressed a joint session of Congress. Today, Thursday, the U.S. president released his multi-trillion US$ budget with its attendant US$1.75 trillion projected deficit, “or 12.3% of the gross domestic product, a level not seen since 1942 as the U.S. plunged into World War II,” as reported by Jonathan Weisman of the Wall Street Journal in a release titled Obama Budget Pushes Sweeping Change. The markets for their part are not just registering their disapproval of U.S. policy as recently articulated. The markets are balking. They’re actively resisting as the U.S. attempts to auction off its debt.

[...] “Apparently the markets think that U.S. risk of sovereign default is steadily creeping up,” writes Alex Salkever in a Microaxis blog burst titled Doomsday Scenario: Could U.S. default on its national debt?

Hedge fund blogger Zero Hedge puts up the numbers here. According to the numbers from finance calculator company Markit, U.S. is a greater default risk than Japan or Germany, among others.

A default would destroy the U.S. economy and TARP recipients, in particular [...]

[...] “The U.S. is borrowing so much that it may have trouble paying the money back, said Jaemin Cheong, a bond trader in Seoul at Industrial Bank of Korea, the nation’s largest lender to small- and mid-sized companies,” writes Susanne Walker in a www.bloomberg.com release titled U.S. Treasuries Fall for Third Day on Spending, Supply Concern

“Yields are headed higher,” Cheong said in an interview. “More issuance will be needed to support the economy. The possibility of default is more and more as time passes.”

The government is depending on overseas investors to help fund its $787 billion economic plan. China is the largest overseas holder of Treasuries, with $696.2 billion, followed by Japan, with $578.3 billion.

The administration forecast gross domestic product to shrink 1.2 percent in 2009, followed by 3.2 percent expansion in 2010. That’s more optimistic than economists’ estimates for a 2 percent contraction this year and 1.8 percent growth next year, according to the median forecast in a Bloomberg News survey.

The White House forecast an annual average yield for 10-year Treasury notes of 2.8 percent this year and 4 percent in 2010 [...]

This could all reverse itself tomorrow. This is a data point without a trend line. The question the sovereign wealth funds need to ask themselves is where else in the world can they park their cash reserves? The Obama administration has bet everything on their answer.

yours &c.
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remarks on Obama’s Address to Joint Session of Congress delivered February 24th 2009

What follows are my remarks on President Obama’s first address to Congress. My unit of analysis is rhetorical argument. By rhetorical argument I mean what Aristotle means by rhetorical argument, enthymeme and paradigm. My method in this case is to mark up President Obama’s introduction. This is the part where he lays out his rationale.

This is my paraphrase of Present Obama’s introduction. If I understand the U.S. President correctly, he says that (a) the economy is in trouble, but (b) we will rebuild because we have the resources to rebuild. These resources are in our laboratories, among our entrepreneurs, and in our capacity for hard work. What is required (c) is for all of us to pull together. Now, (d) if we are honest with ourselves, then we will realize that these problems did not develop overnight. We will realize (e) that when times were good we allowed the few to plunder our surpluses at the expense of the many. Now (f)—and my reading of (f) is largely inferred—we must not just reverse this trend, but complete the work that justice and the historical moment demand.

For the rest of the speech President Obama lays out his proposals. At the end he puts a human face on his proposals by introducing people and telling their stories. This part interests me far less. The exigencies of the moment, the capital markets, public opinion, and an ascendant U.S. Congress have yet to have had their say. President Obama outsourced the stimulus bill to Congress. He has not indicated that he will depart from this method on future legislation. So his proposals will change. What interests me is the rationale President Obama develops in his introduction. This will probably not change as this reflects President Obama’s own analysis of the historical moment, his role within that moment, and what he believes to be the project of his presidency.

First I will lay out the excerpt of the speech. Then I will share my own conclusions.