Thursday Open Thread | 73 comments (72 topical, 1 editorial, 0 hidden)

But worth a read:

Barack Hoover Obama: The best and the brightest blow it again
Just as Herbert Hoover came to internalize the "business progressivism" of his era as a welcome alternative to the futile, counterproductive conflicts of an earlier time, so has Obama internalized what might be called Clinton's "business liberalism" as an alternative to useless battles from another time--battles that liberals, in any case, tended to lose.
Clinton's business liberalism, however, is a chimera, every bit as much a capitulation to powerful and selfish interests as was Hoover's 1920s progressivism. We are back in Evan Bayh territory here, espousing a "pragmatism" that is not really pragmatism at all, just surrender to the usual corporate interests. The common thread running through all of Obama's major proposals right now is that they are labyrinthine solutions designed mainly to avoid conflict. The bank bailout, cap-and-trade on carbon emissions, health-care pools--all of these ideas are, like Hillary Clinton's ill-fated 1993 health plan, simultaneously too complicated to draw a constituency and too threatening for Congress to shape and pass as Obama would like. They bear the seeds of their own defeat.
Obama will have to directly attack the fortified bastions of the newest "new class"--the makers of the paper economy in which he came of age--if he is to accomplish anything. These interests did not spend fifty years shipping the greatest industrial economy in the history of the world overseas only to be challenged by a newly empowered, green-economy working class. They did not spend much of the past two decades gobbling up previously public sectors such as health care, education, and transportation only to have to compete with a reinvigorated public sector. They mean, even now, to use the bailout to make the government their helpless junior partner, and if they can they will devour every federal dollar available to recoup their own losses, and thereby preclude the use of any monies for the rest of Barack Obama's splendid vision.
Franklin Roosevelt also took office imagining that he could bring all classes of Americans together in some big, mushy, cooperative scheme. Quickly disabused of this notion, he threw himself into the bumptious give-and-take of practical politics; lying, deceiving, manipulating, arraying one group after another on his side--a transit encapsulated by how, at the end of his first term, his outraged opponents were calling him a "traitor to his class" and he was gleefully inveighing against "economic royalists" and announcing, "They are unanimous in their hatred for me--and I welcome their hatred."
Obama should not deceive himself into thinking that such interest-group politics can be banished any more than can the cycles of Wall Street. It is not too late for him to change direction and seize the radical moment at hand. But for the moment, just like another very good man, Barack Obama is moving prudently, carefully, reasonably toward disaster.

This is the conclusion. If anyone is interested, I can send a word version by email.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Thu Jun 18th, 2009 at 10:21:27 AM EST

Re: Fantastic movie plot. (none / 1)

Obama should not deceive himself into thinking that such interest-group politics can be banished any more than can the cycles of Wall Street. It is not too late for him to change direction and seize the radical moment at hand. But for the moment, just like another very good man, Barack Obama is moving prudently, carefully, reasonably toward disaster.

It's like "Financial Indiana Jones"; call it "Barack Obama and the Economic House of Cards" or ...

They tried to assimilate me. They failed.

by THE Twank (yatta blah blah @ blah.com) on Thu Jun 18th, 2009 at 11:19:15 AM EST
[ Parent ]

He needs to be more like George Bush. (none / 1)

Rather similar in tone, if not in sarcasm to the Bill Maher thing TBG (?) posted last night where BM suggested he needs to be more like George Bush (hear the audience groan at that).

"Not so much audacity of hope, but hoping for some audacity".

keep to the Fen Causeway

by Helen (lareinagal at yahoo dot co dot uk) on Thu Jun 18th, 2009 at 11:41:22 AM EST
[ Parent ]

Re: Not online (yet?) (4.00 / 2)

Read it a couple weeks ago at the library. What a stroll. I haven't picked up a Harper's in years. Almost difficult to believe I once subscribed!

Cover story. The essayist is manic, more's the pity, he couldn't figure out how to lever the Hoover hook. The RFC summary is criminal though. Worst. Research. Effort. Ever. (WREE) by a paid professional, lately.

Diversity is the key to economic and political evolution.

by Cat on Thu Jun 18th, 2009 at 12:08:14 PM EST
[ Parent ]

In what ways was it wrong on RFC? (4.00 / 2)

Exacerbating the entire situation was the RFC itself. Hoover's leading weapon to combat the Depression performed with TARP-like languor, secrecy, and nepotism. Throughout 1932, as banks continued to topple by the hundreds, the RFC disbursed only three-quarters of its available money. Although Hoover had declared that the agency was "not created for the aid of big industries or big banks," a record of its operations revealed that most of its money had indeed gone to a very few of the country's biggest financial institutions. In June of 1932, the RFC's president, Charles G. Dawes--who had just served as vice president of the United States under Calvin Coolidge--resigned his post, took a new job as head of the Central Republic Bank in Chicago, and promptly secured for his employer an RFC loan that nearly equaled the bank's total deposits. Dawes's successor, Atlee Pomerene, then lent another $12 million to a Cleveland bank of which he remained a director.
These facts were, in the end, wrestled out in the open only by congressional fiat. The recipients of some $642 million of the RFC's loans--nearly half its total expenditures--were not revealed at all. Hoover, like Obama, had insisted on secrecy to keep the proceedings from being "politicized," but, inevitably, this fear of politicization in the end only led to more politics. The writer John T. Flynn, who reported much of the RFC scandal in the pages of this magazine, found that most of the money was distributed "by a group of directors drawn from those business groups whose performances during the pre-crash years have rendered them objects of suspicion to the American people" and that the "immense sums they dispensed were given to borrowers, many of whom, to put it mildly, have forfeited, justly or unjustly, the confidence of the people."
The RFC's deliberations were understood--with good reason--not as effective management but as insider dealing: common financial practice through the 1920s, but politically and morally insupportable at a time when millions of Americans were losing their jobs, their homes, and their savings, and when some were literally dying of starvation. What's more, even the loans that were made proved less than effective. The rescued banks, much like the rescued banks today, simply hoarded the new capital and refused to venture out into the marketplace.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Thu Jun 18th, 2009 at 12:46:36 PM EST
[ Parent ]

Re: In what ways was it wrong on RFC? (4.00 / 2)

Hoover implementation of the RFC last about 12 months.

The RFC Liquidation Act of 1953 terminated RFC lending authority and abolished the corporation, effective June 30, 1957. The remaining functions and outstanding loans of the RFC were transferred to the Housing and Home Finance Agency, General Services Administration, Small Business Administration (SBA) and the Treasury. Over the period, the RFC had lent approximately $13 billion.
In other news, NBER has not yet declared the US economy in recession.

1, 2, 3, 4, etc etc ... but that's just me commenting here and there.

The least Cover Boy cooda done was summed up a search of frothing Time magazine period pieces. Hilarious...

1934: The day after President Roosevelt sent his budget message to Congress, citizens thumbed through the letter "S" in dictionaries looking for words to express emotion. Republicans magnified their feelings with "shocking." Democrats minimized theirs with "startling." Some liked "stupendous," others preferred "shudder," but most overworked word in the U. S. vocabulary was "staggering." The President planned to have the U. S. spend $31,179 a minute--every minute night and day--till June 30. He planned to have the U. S. borrow $6,000,000,000 before June 30--an amount slightly larger than the total amount of U. S. currency in circulation. He proposed to have the U. S. spend $17,000,000,000 in this fiscal year and next. He foresaw a public debt by July 1935 of nearly $32,000,000,000-- $6,000,000,000 higher than the post-War peak. The budget for fiscal 1934 (ending June 30 next) was presented to Congress in December 1932 by Herbert Hoover. That budget was revised by Franklin Roosevelt during the special session of Congress last spring. Last week it turned up again along with the budget for fiscal 1935, in the President's twin-budget message.
Outlay. When President Hoover planned the budget for fiscal 1934 the expected outlay for the Government came to $3,257,000,000. President Roosevelt did two things to that figure. He lopped off $360,000,000 of veteran's pensions, and he set aside in a separate budget all emergency expenses.

1938: One section of Franklin Roosevelt's new pump-priming program that Congress has passed on is a law allowing RFC to use $1,500,000,000 for loans of almost any sort. Last week, therefore, RFC Chairman Jesse Jones took to the air to invite businessmen to "come and get it." This they did with a rush: in Manhattan, for example, the Hotel New Yorker politely but firmly asked a bureau of the Smaller Business Association of New York to leave after 600 would-be borrowers had stormed it one morning in search of RFC loan application blanks. Nonetheless, Jesse Jones and Franklin Roosevelt were apparently not satisfied that enough uses had yet been found for RFC munificence. After White House conferences between Messrs. Roosevelt, Jones, SEC Chairman William O. Douglas and SEC Commissioner John W. Hanes. RFC revealed three more plans for injecting money into the hardening arteries of U. S. Commerce.
Underwriting. SEC last week announced that registration of new securities in the first quarter of 1938 set a three-year low of $355,819,000. In Wall Street it was considered quite a feat that a banking syndicate headed by Morgan Stanley & Co. managed to float successfully a $60,000,000 refunding for Consolidated Edison Co. of New York. Thus underscored still again was the almost complete stagnation of U. S. money markets which has existed for the last six months. Financiers are agreed that needed expansion of industry cannot occur until this stagnation is ended. But underwriters generally are too scared to attempt the job. Last week Jesse Jones announced that RFC would shortly undertake to underwrite the underwriters with secured loans.

in contrast to the palpitating New Deal offered Kenosha, WI, also 1938. F'r instance.

Congressional investigation of the RFC had no political momentum under Truman and Ike until FDR and Jesse Jones were DEAD.

BWAHAHAHAHAHAHAHA....

Diversity is the key to economic and political evolution.

by Cat on Thu Jun 18th, 2009 at 06:19:28 PM EST
[ Parent ]

Ahahahaha ... (4.00 / 2)

This is too funny.

1953: When the first batch of RFC's assets went on sale last week as part of the plan to put the agency out of business, the results were disappointing. Of the 171 lots of local Government bonds, worth $9,283,784, only 98 lots were bid for, and some offers ran as low as 50¢ on the dollar. Bids for only 39 lots were accepted, netting RFC $1,492,982, about 93% of their face value. Said RFC Boss Kenton Cravens: "No assets will be disposed of at undue sacrifice. There will be no rummage sales."

Diversity is the key to economic and political evolution.

by Cat on Thu Jun 18th, 2009 at 06:48:04 PM EST
[ Parent ]

Re: Ahahahaha ... (none / 0)

Hoover, like Obama, had insisted on secrecy to keep the proceedings from being "politicized," but, inevitably, this fear of politicization in the end only led to more politics.

Ol' Kev is confusing Hoover with FDR, more precisely, Jesse Jones. Hoover implementation was contemporaneously and is now considered a fiscal and monetary strategy failure, because (1) Congress authorized insufficient RFC capital coverage of R&R, utility-backed assets* and (2) Congress required public disclosure of borrowers so discouraging participation rates among opened and closed (or failing) banks who purportedly feared panic. "Large-scale" amounts of loans authorized and disbursed per annum were 1932, 1933. Then RFC began purchasing preferreds, the amounts of which peaked in 1934 though the rate thereafter increased. Democrats authorized RFC direct lending to businesses in 1934 (Sprinkle).

Doubtless brokers tried to game this "system" of quantitative easing. It seems clear in the lore Jones enjoyed greater latitude and uncontested discretion lubing industry cronies.

---
*RFC funded by $1.5B bond issue + appropriation. Congress prohibited FRB discount and purchase of the debt. By 1944 Treasury healt all outstanding notes.

Diversity is the key to economic and political evolution.

by Cat on Thu Jun 18th, 2009 at 08:01:05 PM EST
[ Parent ]

Thursday Open Thread | 73 comments (72 topical, 1 editorial, 0 hidden)

Top Diaries

Easter Grift

China Plans: Energy in the 15th Five Year Plan

A Deadline is a Deadline

But First . . .

Energy (and Other) Events Monthly - April 2026

City Agriculture - March 22, 2026

Recent Diaries

Iran Ceasefire at Death's Door

A Murderer At Large, the World Sits Back and Watches

Easter Grift

Insanity

China Plans: Energy in the 15th Five Year Plan

A Deadline is a Deadline

Trump: AMALEK, Total Annihilation of Persia

A Revolt: With Francis a New Beginning?

But First . . .

Energy (and Other) Events Monthly - April 2026

City Agriculture - March 22, 2026

Obnoxious

Cowardice and Treachery Combined: Spells TERROR

Occasional Series