Monday, November 30, 2009

Obama's Presidency Lies in the Hands of Tim Geithner, Ben Bernanke and Larry Summers

I know I've posted a lot on this blog about how much Larry Summers and Tim Geithner suck, but I promise you, it's not without reason.

While health care is front and center at the moment, it's only one of many issues that we hope for Obama to tackle over the next 4 (hopefully 8) years such as immigration reform, labor law reform, climate change legislation and so on.

And while those issues are important, I don't think I'm exaggerating when I say the biggest threat to any of those issues on Obama's agenda is the crappiness of his economic policy, and if you didn't know, this is why:

People's opinions about the party in power are often tied to the economy, and when the economy is this bad, it only becomes more important. The stimulus has helped, but as predicted by "The Group of Economists Who Have Consistently been Right about Almost Everything", it wasn't big enough. Now there's a dual problem of needing more stimulus, while simultaneously fixing the larger problems with the banks.

Geithner, Bernanke and Summer's solution to the credit crisis has been to give the banks huge amounts of free money and risk free loans, assuming that they'll start lending to industries and individuals who will help restart the economy. However, to the surprise of no one, the banks are hoarding that money, and using it to continue taking the same risks that caused the crisis in the first place. Until the banks are willing to lend, the job market will not fully recover and the economy will not turn improve in ways that effect the majority of Americans.

And if that does not happen by 2010... it will not be a pretty picture for the Democrats in congress or any issue we had hoped to address during Obama's presidency. If it doesn't get addressed by 2012, some smart Republican will use the relationship between this administration's economic team and Wall Street to make Obama a one term president. So as said before, the stakes of a policy change here are very, very high.

Two Steps (One likely, one unlikely) that can help limit the damage:

Step 1: Pass a jobs bill, like yesterday. If unemployment doesn't take a downturn by November the Democrats will be slaughtered in the 2010 elections. Passing some sort of jobs bill is fairly likely to happen, since plently of Democrats in the house are shitting themselves as we speak.

Step 2: Clean house with Obama's economic team, and start hiring some of the people who have gotten this thing right. Geithner, Summers and Bernanke subscribe to the ideology that got us into this mess, and more of the same failed ideas and policies isn't going to give us a real recovery. While this may seem like an obvious solution, Obama's continued faith in his economic team throughout several unpopular scandals makes a change unlikely.

The time to make a change is now. While it may sound like hyperbole, the fate of Obama's presidency might very well rest in the balance.

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