Chilling lessons amid gluttony
Sunday, 24 January 2010
Fazal M. Kamal
MERELY a year after the day when there was singing and dancing and music and rapturous crowds defying the winter chill Barack Obama was dealt a rough hand by fate -- and the voters of Massachusetts. It just seems to get more and still more difficult for the United States President as his first year in office ended and the second year began. It definitely does not augur well for his reform and legislative agenda. And nothing could have made it more obvious than the stunning loss of a safe Democratic Senate seat that was earlier occupied by the illustrious Kennedy brothers, John and Edward.
Clearly the wave of enthusiasm and hope that brought him to the White House has taken a severe blow and it's equally clear that the voters wanted to send a message to Washington, whether one agrees with that message or not is not as relevant at the moment as the question what awaits President Obama now and what will be his strategy to confront the new and harsher realities.
"They have to rethink some things, recalibrate and refocus. They tried to do too much. And he's taken some hits as a result," political scientist Steve Schier observed. He'll have to navigate not only through a wary Congress but also amid a backlash among many Americans against his agenda, notably his health care proposal.
"The conventional wisdom a year ago was that the tectonic plates had shifted, that Obama could win and anything was possible," said Michael Franc, the vice president of government relations at the Heritage Foundation, a conservative policy institute. "Addressing that gap between where he wants to take the country and what the American people will tolerate is his biggest single challenge," Franc said. "I'm not sure how much of his agenda he can get."
That gap is primarily due to the fact, as the polls show, despite the 2008 election, Americans remain more moderate to conservative than liberal, "and that creates a head wind against Obama's agenda for a more activist national government…. His approval rating has dropped sharply and is the second lowest in half a century for any president entering his second year, while his disapproval rating is the highest ever at this point in a presidency," wrote Steven Thomma and Margaret Talev of the McClatchy newspapers.
While it was becoming increasingly difficult for the Obama administration to get its most urgent priority issue, healthcare reform (reforms like the ones the voters in Massachusetts who voted against the Democratic candidate, ironically, already enjoy), accepted by the Congress now with this defeat not merely this piece of legislation but the whole raft of ideas this administration had been thinking of becomes almost impossible to bring into reality in their pristine shape. These are extremely harsh lessons for any politician especially in his very first year in office.
Naturally now President Obama will have to review all that he had wished to do and more importantly make better and more strenuous efforts to sell his agenda to the American people who by tradition and history are suspicious of activist governments and what they often perceive as governmental intrusion in areas they feel ought to be left alone by the government. Even in such matters as providing an economic stimulus package not all are in agreement and polarisation according to partisan beliefs has gained surprising momentum.
He came to the White House when the United States was at one of the most critical junctures in its history. He was left to cope with wars in Iraq and Afghanistan and the larger "war on terror" with all their ramifications; an economy in shambles with businesses closing, homes being lost by their owners and workers becoming jobless. Additionally, the gluttony on Wall Street as exhibited more acutely in terms of bonuses and compensations that amounted to millions of dollars did not ease the situation for the administration. Then a lone Nigerian with his clumsy actions complicated matters further.
Ultimately it would appear that large sections of people in the United States are yet not prepared to share the vision of a presidency that Barack Obama has: a liberal, a more humane, a more understanding leadership, a more action-oriented government and the policies that come with such an administration. As for President Obama, tough struggles await him all along his path.
The gluttony doesn't end
That this is, in reality, a surreal world is known to most people. But apparently not to those who inhabit one of the most surreal parts, i.e. the denizens of the financial world. Their actions over the past couple of years have by now enraged a very substantial segment of the people of the United States with the anger reaching all the way to the White House.
First they were responsible---with their irresponsible ways---for bringing the world's economy to the brink of collapse, then they had to be rescued by the government with billions in taxpayers' money, and now they are giving themselves outsize compensation in pay and bonuses which could total $145 billion for 2009, according to The Wall Street Journal, which also noted it would be "a record sum that indicates how compensation is climbing despite fury over Wall Street's pay culture."
Even though the chairman of the Federal Deposit Insurance Corporation had said that "the (financial) crisis has shown that most financial institution compensation systems were not properly linked to risk management…Formula-driven compensation allows high short-term profits to be translated into generous bonus payments without regard to ant longer-term risks," nothing is going to stop the banking fat cats from handing out large bonuses to themselves and their colleagues.
All this has led, among other steps, to President Obama launching a ten-year $90 billion tax on banks while he stated, "I'll urge you (the financial institutions) to cover the costs of the rescue not by sticking it to your shareholders or your customers or fellow citizens with the bill, but by rolling back bonuses for top earners." However, that exhortation is most unlikely to have much effect, as executives, managers, bankers, et al are expected to receive almost 18 per cent more than they got in 2008---"and slightly more than in the record year of 2007."
This phenomenon, absurd as it may seem, is taking place even as a Congressional Commission begins scrutinising the financial crisis that brought Wall Street giants to their knees, took joblessness to its zenith and caused an economic recession from which the majority of the world's economies are yet to recover. During one hearing of the Congressional Commission the chairman of the commission commented, after listening to some of the top United States bankers discuss how they passed off increasingly dubious assets while simultaneously betting that the same instruments would go belly up, "It sounds like selling a car with faulty brakes and then buying an insurance policy on the buyer of those cars."
Said the head honcho of Goldman Sachs to the commission, "We were going to bed every night with more risk than any responsible manager would want to have." Added Morgan Stanley's big kahuna, "We did eat our cooking and we choked on it." But evidently they are not yet ready to make the necessary alterations -- at least not without a great lot of fuss.
The writer can be reached at e-mail: fmk222@gmail.com
MERELY a year after the day when there was singing and dancing and music and rapturous crowds defying the winter chill Barack Obama was dealt a rough hand by fate -- and the voters of Massachusetts. It just seems to get more and still more difficult for the United States President as his first year in office ended and the second year began. It definitely does not augur well for his reform and legislative agenda. And nothing could have made it more obvious than the stunning loss of a safe Democratic Senate seat that was earlier occupied by the illustrious Kennedy brothers, John and Edward.
Clearly the wave of enthusiasm and hope that brought him to the White House has taken a severe blow and it's equally clear that the voters wanted to send a message to Washington, whether one agrees with that message or not is not as relevant at the moment as the question what awaits President Obama now and what will be his strategy to confront the new and harsher realities.
"They have to rethink some things, recalibrate and refocus. They tried to do too much. And he's taken some hits as a result," political scientist Steve Schier observed. He'll have to navigate not only through a wary Congress but also amid a backlash among many Americans against his agenda, notably his health care proposal.
"The conventional wisdom a year ago was that the tectonic plates had shifted, that Obama could win and anything was possible," said Michael Franc, the vice president of government relations at the Heritage Foundation, a conservative policy institute. "Addressing that gap between where he wants to take the country and what the American people will tolerate is his biggest single challenge," Franc said. "I'm not sure how much of his agenda he can get."
That gap is primarily due to the fact, as the polls show, despite the 2008 election, Americans remain more moderate to conservative than liberal, "and that creates a head wind against Obama's agenda for a more activist national government…. His approval rating has dropped sharply and is the second lowest in half a century for any president entering his second year, while his disapproval rating is the highest ever at this point in a presidency," wrote Steven Thomma and Margaret Talev of the McClatchy newspapers.
While it was becoming increasingly difficult for the Obama administration to get its most urgent priority issue, healthcare reform (reforms like the ones the voters in Massachusetts who voted against the Democratic candidate, ironically, already enjoy), accepted by the Congress now with this defeat not merely this piece of legislation but the whole raft of ideas this administration had been thinking of becomes almost impossible to bring into reality in their pristine shape. These are extremely harsh lessons for any politician especially in his very first year in office.
Naturally now President Obama will have to review all that he had wished to do and more importantly make better and more strenuous efforts to sell his agenda to the American people who by tradition and history are suspicious of activist governments and what they often perceive as governmental intrusion in areas they feel ought to be left alone by the government. Even in such matters as providing an economic stimulus package not all are in agreement and polarisation according to partisan beliefs has gained surprising momentum.
He came to the White House when the United States was at one of the most critical junctures in its history. He was left to cope with wars in Iraq and Afghanistan and the larger "war on terror" with all their ramifications; an economy in shambles with businesses closing, homes being lost by their owners and workers becoming jobless. Additionally, the gluttony on Wall Street as exhibited more acutely in terms of bonuses and compensations that amounted to millions of dollars did not ease the situation for the administration. Then a lone Nigerian with his clumsy actions complicated matters further.
Ultimately it would appear that large sections of people in the United States are yet not prepared to share the vision of a presidency that Barack Obama has: a liberal, a more humane, a more understanding leadership, a more action-oriented government and the policies that come with such an administration. As for President Obama, tough struggles await him all along his path.
The gluttony doesn't end
That this is, in reality, a surreal world is known to most people. But apparently not to those who inhabit one of the most surreal parts, i.e. the denizens of the financial world. Their actions over the past couple of years have by now enraged a very substantial segment of the people of the United States with the anger reaching all the way to the White House.
First they were responsible---with their irresponsible ways---for bringing the world's economy to the brink of collapse, then they had to be rescued by the government with billions in taxpayers' money, and now they are giving themselves outsize compensation in pay and bonuses which could total $145 billion for 2009, according to The Wall Street Journal, which also noted it would be "a record sum that indicates how compensation is climbing despite fury over Wall Street's pay culture."
Even though the chairman of the Federal Deposit Insurance Corporation had said that "the (financial) crisis has shown that most financial institution compensation systems were not properly linked to risk management…Formula-driven compensation allows high short-term profits to be translated into generous bonus payments without regard to ant longer-term risks," nothing is going to stop the banking fat cats from handing out large bonuses to themselves and their colleagues.
All this has led, among other steps, to President Obama launching a ten-year $90 billion tax on banks while he stated, "I'll urge you (the financial institutions) to cover the costs of the rescue not by sticking it to your shareholders or your customers or fellow citizens with the bill, but by rolling back bonuses for top earners." However, that exhortation is most unlikely to have much effect, as executives, managers, bankers, et al are expected to receive almost 18 per cent more than they got in 2008---"and slightly more than in the record year of 2007."
This phenomenon, absurd as it may seem, is taking place even as a Congressional Commission begins scrutinising the financial crisis that brought Wall Street giants to their knees, took joblessness to its zenith and caused an economic recession from which the majority of the world's economies are yet to recover. During one hearing of the Congressional Commission the chairman of the commission commented, after listening to some of the top United States bankers discuss how they passed off increasingly dubious assets while simultaneously betting that the same instruments would go belly up, "It sounds like selling a car with faulty brakes and then buying an insurance policy on the buyer of those cars."
Said the head honcho of Goldman Sachs to the commission, "We were going to bed every night with more risk than any responsible manager would want to have." Added Morgan Stanley's big kahuna, "We did eat our cooking and we choked on it." But evidently they are not yet ready to make the necessary alterations -- at least not without a great lot of fuss.
The writer can be reached at e-mail: fmk222@gmail.com