Capital Markets

There Are Those Who Say Obama Likes to Say "There Are Those Who Say"

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MarketWatch puts together a by-the-numbers analysis of President Obama's speech on the anniversary of the death of Lehman Bros. That's 13 risks, 11 reforms, and four "accountabilitys." Uncounted by MarketWatch were three instances of Obama's favorite rhetorical setup: "There are those/some who say/claim/argue…." I believe that's relatively low for a 4,300-word oration.

The speech seems to have threaded the needle. There was tough talk about regulation even though all the president's financial reform proposals are in congressional limbo. There was plenty of lip service to the free market and innovation, even though its purpose was clearly to cement the status quo—if not through regulation then through protection.

Here is a characteristic sentence, which appears to offer a tough new approach to moral hazard while actually declining to impose any standards at all: "Those on Wall Street cannot resume taking risks without regard for consequences, and expect that next time, American taxpayers will be there to break their fall." If the passage of the massively unpopular bailouts of 2008 proved anything, it's that the American taxpayers have absolutely no say about whose fall they are forced to break.

The most trenchant criticism of the speech comes from an unexpected source. Rep. Brad Sherman (D-Calif.) says the plan for a much broader federal "resolution" authority (which would have the ability to bail out, take over and otherwise support "systemically significant" institutions) is not the solution to the too-big-to-fail problem but the exact opposite. An institution like this would create a permanent TARP which would coddle the biggest players while subsidizing their bad behavior.

True to form, the TBTF problem has become more, not less, acute since Obama took office. The New York Times economy blog notes how the major players have gorged in recent days:

The nation's four biggest banks now control 60 percent of all bank deposits in the country, higher than two years ago. The handful of banking winners, like JPMorgan Chase and Wells Fargo, have acquired giant failing competitors. The ranks of bulge-bracket Wall Street investment banks have been cut back by the loss of Lehman Brothers and Bear Stearns. The remaining survivors, like Goldman Sachs and Morgan Stanley, have been recruiting top producers from their crippled rivals.

Obama lets Wall Street escape again.

If there was a bright spot in the Federal Hall address, it was that the speech was not really newsworthy at all. Nobody cares about this issue anymore. In what may eventually become an entry in the Big Book of Strategic Errors, Obama chose some time ago to de-emphasize financial regulatory overhaul and instead put his energies into health care reform. Wall Street has cooperated by entering a relative lull, which makes trouble in the capital markets seem less urgent. For the time being, the regulatory bullet has been dodged.

That won't last. When (not if) the talk of economic recovery proves to have been premature, the Democrats may get a chance to revisit financial industry overhaul (which, in the new logic of topsyturveyland, will mean rewarding the guilty rather than punishing them). The irony is that nature was doing a perfectly fine job of overhauling the financial markets, before the smoothly transitioning Bush-Obama teams used your grandchildren's money to interrupt nature in its just and healthful course.

And a housekeeping note: Good on the president for not using the failure to bail out Lehman as an example of market fundamentalism that made the recession worse—as I predicted he would do yesterday. His only comment along these lines was: "Congress and the previous administration took difficult but necessary action in the days and months that followed."

NEXT: Patrick Swayze Has Left Us For the Great Bar Fight in the Sky

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  1. It’d be interesting to see political speeches get the Wikipedia editor’s treatment.

    [weasel words]
    [citation needed]
    [dubious – discuss]

  2. Congress and the previous administration took difficult but necessary action

    Well, of COURSE he didn’t bash Bush’s fuck-ups that he voted for.

    Obama’s as much of an economic ignoramus as Gerald Ford or Richard Nixon. How long till he starts making up WIN buttons?

    -jcr

  3. OK, I haven’t RTFA or even the post, or any comments, but can I just say I love the pic of Uncle Pennybags.

  4. Am I the only one who thought that his association with the Chicago School meant he had at least had a marginal understanding of markets?

    BTW – I didn’t vote for the guy but deep down I was hoping to be surprised with a little pragmatism – shame on me.

  5. Am I the only one who thought that his association with the Chicago School meant he had at least had a marginal understanding of markets?

    Well, he does. They’re bad.

  6. I voted for him, and so far I don’t think he’s done anything McCain wouldn’t have done, with the possible exception of the tire tariff. (The tire tariff does, at last, present a very clear contrast, for the worse, with Bush.)

  7. Tim, do you honestly believe that only McCain and Obama were on the ballot? Did you ever consider another party? Or a write-in? Or simply not voting? Do you really think Stalin is okay because he didn’t do anything Hitler wouldn’t have?

  8. I voted

    That’s a shitty thing to do.

  9. Tim,
    I would say no on stimulus 2, we wouldn’t be debating a public option on health care and cap and trade would be off the table.

    Also, we would probably be in control of Iceland ready invade europe.

  10. Well, Brad Sherman sure is off the reservation on this one. I’m sure he’ll hear from Pelosi about this. “Hey, we’re trying to get control of the economy here, and you’re not helping!”

  11. I voted for him, and so far I don’t think he’s done anything McCain wouldn’t have done

    Sign SCHIP?

  12. I voted for him, and so far I don’t think he’s done anything McCain wouldn’t have done, with the possible exception of the tire tariff.

    Au Contraire. Instead of calling Kanye West a jackass, McCain would have said, ‘I’m gonna kick the punk’s ass.’

    Still, Obama gets points for calling him out.

  13. Still, Obama gets points for calling him out.

    And it was a very deft calling out, passively letting it go out on Twitter. He’s a real dropped-hanky flirt, Obama.

    Good call on SCHIP. So I’ll say tire tariff is the one major thing he’s done that McCain wouldn’ta done. Since we’re playing Avalon Hill counterfactuals, I’m saying with McCain you’d still have gotten Stimulus 2 (with window-dressing variations), no health care overhaul (though I don’t think we’re going to get a health care overhaul anyway), and you’d have gotten cap ‘n’ trade. McCain’s more wobbly than you think, and he’s had decades, not just years, to learn wobbliness in the Senate. I think actually would have gotten a major financial-industry regulatory overhaul with McCain too. Maybe another war.

    Also I believe neither 2008 major party candidate is comparable to either Hitler or Stalin.

    And I’ve voted third party in all but two of my presidential votes. Decided I wanted to jump in with the team for the big win in 2008 because they seemed to be having fun and I’m free to do what I want any old time.

  14. “There are those/some who say/claim/argue….” that if the Federal Reserve hadn’t pumped so much cheap money into the system for so long, we wouldn’t have had an economic collapse.

    But then again, “There are those/some who say/claim/argue….” that if shit tasted like butter, you could spread it on your toast.

  15. Call me a racist, but when Obama opens his mouth, all I hear is white noise.

  16. This headline reminds me of Top Gear’s intro for the Stig. Some say, he was born in Kenya. Some say he is a crpto-marxist. All we know is we call him the Obama.

  17. I agree with everything you say Tim except for the war part. That is a cheap shot. You guys act like the US runs the world and the enemy never gets a vote. I think we are just as likely or more likely to end up in another war with Obama than we would have been with McCain. Obama has the advantage of the Dems turning the anti-war movement off during his administration.

  18. also Tim. We are less likly to get Cap and Theft than we are Obamacare. If Obama can’t get cap and theft through, it is doubtful McCain could have. And don’t forget Card Check. And Obamacare sadly is not dead. In the end if we end up with a trade war and Obama care or any one of the two, that is a pretty major downside to Obama winning the election.

  19. Missed his speech. He did vow to (someday) remove the Bush “no uptick” rule on shorting stock? And to change the Bush-imposed “mark to market” rule that devastated certain stocks?
    Or was it the usual “piss on my shoes and tell
    me it’s raining” lies we get from our presidents?

  20. “Those on Wall Street cannot resume taking risks without regard for consequences, and expect that next time, American taxpayers will be there to break their fall.”

    I thought the exact same thing when I read this statement from his speech. The FUCKING TAXPAYERS HAD ZERO SAY IN ANYTHING. Someone needs to start calling this POS President out as he mentioned doing to others himself. Call his fucking bullshit lying ass out on everything. I could give a shit if it is not polite, if being polite runs up 13 TRILLION in debt then FUCK THAT, get in HIS FACE and ANY ONE elses who is fucking full of shit.

  21. In related news, Obama is celebrating Tuesday by making a speech.

  22. The irony is that nature was doing a perfectly fine job of overhauling the financial markets, before the smoothly transitioning Bush-Obama teams used your grandchildren’s money to interrupt nature in its just and healthful course

    Nature?
    Not the distortions of previous government policies?

    Hmmm…

  23. There are those/some who say/claim/argue….”

    This rhetorical device always reminds me of the Dennis Hopper episode of The Twilight Zone.

  24. If the passage of the massively unpopular bailouts of 2008 proved anything, it’s that the American taxpayers have absolutely no say about whose fall they are forced to break.

    Sure they do. If they elected Ron Paul for President, there would be no more bailouts. A vote for pretty much anybody but Paul (and Barr in the general) was a vote for the bailouts.

    Of course, Paul bombed in the primaries big time, and Barr got a typical LP showing of .4%.

  25. My favorite is “too often, we”, followed by all the horrible things Amerikkka does.

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