I suspect Carly Fiorina was and is correct and Tony Vietor full of it (who? another Obama spokesperson) when Vietor was thrust forward to castigate some remarks by Fiorina: “If John McCain’s top economic adviser doesn’t think he can run a corporation, how on Earth can he run the largest economy in the world in the midst of a financial crisis?” said Obama spokesman Tommy Vietor. “Apparently, even the people who run his campaign agree that the economy is an issue John McCain doesn’t understand as well as he should.” Watch Fiorina says Palin isn’t ready for big business »
That last video link was added by the even-handed professionals at CNN. Actually what Fiorina said is that none of the four candidates – Palin, McCain, Obama or Biden – could run a company like her own Hewlett-Packard. (“Well, I don’t think John McCain could run a major corporation, I don’t think Barack Obama could run a major corporation, I don’t think Joe Biden could run a major corporation,” Fiorina said.) I wouldn’t doubt she’s correct. And as she later points out, Presidents aren’t supposed to (run corporations). That’s not their job.
Of course, this is just another of the dumb daily (or hourly) partisan skirmishes in this heated campaign season with the hapless Vietor willingly or unwillingly in the hatchet man role.
More importantly, who is the most fit to solve the current economic crisis? Beats me, but I admit to the following suspicion – the President doesn’t have nearly as much control of the economy as his detractors or admirers, depending on the circumstances, would like us to believe. At least to this layman, business and stock swings don’t seem to correlate very well with Presidential decisions. Administrations shift in the midst of business cycles with the new claiming success for the apparent victories of their predecessors and vice-versa. It may be “the economy, stupid,” in James Carville’s immortal words, but no one knows what to do about it. Our giant economy with all its moving parts is susceptible only to marginal control from the outside and the vast majority of that is done by the Fed, not the President. (Of course the Chairman of the Fed serves at the pleasure of the President, etc., but how often have you seen one fired?) Still, we are in difficult times, even if not to the extent the media wants us to believe.
In all this confusion, there is, however, one interesting paradox if you accept our current crisis began with sub-prime mortgage lending. The initial idea for these loans came from an idealistic impulse (at least by some) to bring our more disadvantaged citizens into the economic system by helping them to own their homes. Yet another example of no good deeds being unpunished. [And how.-ed. And how.]
I’m sure McCain and Palin could run a corporaton better than Fiorina. Hewlett-Packard had been a successful, respected corporation for decades when Carly took over and soon thereafter went into decline. After the board wised up and fired her, HP almost immediately started kicking butt again, leaving Dell in the dust and challenging IBM.
Race guilt has much to do with our present economic mess. Lending institutions were essentially forced to make loans to high credit risks. The top executives knew that they were going to lose some money, but nonchalantly concluded that this was just the cost of doing business. This was deemed far preferable then having their image severely damaged by being called racists. Alas, far too many Americans naively believe Republicans monopolize Wall Street. Nothing could be further from the truth. Democrats like Robert Rubin long ago realized that their wealth could be greatly increased by manipulating the power of our elected officials and government bureaucrats. This is also the reason for a lot of the global warming hysteria. Firms like Goldman Sachs have billions of dollars invested in “green” stocks.
Bubbles burst, no matter who is in the White House. In truth, I think Presidents respond to economic conditions more than they create them.
I do think that the whole Fanni Mae and Freddie Mac business has something to do with the government however, because of its unique status as both private and public.
I also know that the Bush administration back in 2003 wanted to take over regulation for it because the Democrats in Congress were not doing their job. But people like Barney Frank blew them off. Kind of like the whole social security issue: Problem? What problem?
Government-run, “command” economies don’t work. See the history of the USSR, Cuba, Communist China, North Korea, Mugabe’s Zimbabwe, socialist England, National Socialist Germany, Fascist Italy, etc.
In the present case, liberals demanded an end to discrimination in lending. Using the Community Reinvestment Act as a lever, regulators — first under Clinton, then continued under Bush — demanded that financial institutions make loans they otherwise wouldn’t have made. (Of course, there was always the wink-wink reminder that the Fed would back them up if they got into trouble.)
So what we have now is the inevitable result of a great deal of indiscriminate lending. And, as usual, the left will use this mess as an excuse to demand still more regulation.
All that’s really needed to solve this problem is simply: 1) Stop telling banks and mortgage companies who they must loan money to. And 2) Stop helping those that get into trouble.
“If John McCain’s top economic adviser doesn’t think he can run a corporation, how on Earth can he run the largest economy in the world in the midst of a financial crisis?” said Obama spokesman Tommy Vietor.
That statement shows the Team Obama believes it’s the president’s job to run the economy. No, it isn’t, at least not in the US. Other countries have had the party in power run the economy. The results were underwhelming.
To me, that’s just further evidence that Team Obama is a bunch of socialists.
If the president doesn’t have much control over the economy, will you at least concede he does have some influence? I mean, just a little. He’s not the Wizard of Oz by any means, but policy does matter.
Also, Michael, I find your blaming of this on the left to be quite strange. The banks and mortgage companies are motivated by other means than political mandate, namely profit. You really think banks looked at each other and said, “Listen, man, it’s a nice idea, but trust me on this, if we’re not careful, it’s gonna blow up in our faces in a couple years.” Or did they say, “Hoo-hah. Let’s go make some money!”
So they were ignoring the risks while hoping for big profits. I hardly see how that’s the “left’s” fault.
At any rate, the history books are going to read that it was Bush’s Treasury Department that went on a bail-out spree in 2008, not the all-powerful “left.”
“To me, that’s just further evidence that Team Obama is a bunch of socialists.”
It’s probably more just a bunch of people who will say anything to win.
NONE of the candidates has had significant executive experience. Biden and Obama haven’t run anything bigger than a Senate staff office. McCain ran a fairly large training squadron: that’s better than B+O, but stil pretty minor on the scale of things. Pailin, strangely, has the most executive experience of any of them.
And yes, it does matter. “Word people” tend not to understand this point, but there is a huge difference between writing/talking about things, and actually getting things done.
The president has a lot less domestic authority than most people realize. His real power is in foreign policy. Domestically, the white house is little more than a bully pulpit. To the extent government has the ability to nudge the economy in one direction or the other, it’s primarily through regulatory legislation–congress.
I agree with David Thomson. My small town bank which was solid as gold was forced by the Feds under Clinton to start making a certain percentage of bad loans or else face stiff penalties. It was also highly pressured during Clinton to buy millions of dollars of preferred Fannie Mae stock. This last dictate was given to over 8,000 U.S. banks. My bank is writing off all this on taxes, which will be less revenues in U.S. coffers.
Well intentioned fixes for one problem end up—as sure as the law of gravity—-creating at least a few more in process.
One other point with respect to Thomson above: Anyone who thinks Paulson is a Republican or right leaning finance man is utterly deluded.
Don’t believe what the man says, believe what he does.
A good article by Steve Sailer on the topic Roger raises, how desire to help the poor (minorities) contributed to this mess: http://www.takimag.com/site/article/the_diversity_recession_or_how_affirmative_action_helped_cause_the_housing/
Neither Obama or McCain would dream of talking about this, of course.
I’m not sure the way out, and what government should and shouldn’t do. This guy Nouriel Roubini was on Charlie Rose the other night, and really sounded like he knew what the hell he was talking about. He wasn’t particularly left-wing either. He’s a doomsayer who everyone dismissed two years ago, now many of his predictions have come through: http://www.rgemonitor.com/blog/roubini
(Requires registration that is free)
This crisis should drive home the idea that this is a serious election. No more lipstick and pigs.
Sorry for the double post, but this guy Roubini is a genius, and everyone who doubts that deregulation was part of the problem should read this, which he wrote after the Fannie and Freddie bailout:
“This biggest bailout and nationalization in human history [Fannie and Freddie] comes from the most fanatically and ideologically zealot free-market laissez-faire administration in US history. These are the folks who for years spewed the rhetoric of free markets and cutting down government intervention in economic affairs. But they were so fanatically ideological about free markets that they did not realize that financial and other markets without proper rules, supervision and regulation are like a jungle where greed – untempered by fear of loss or of punishment – leads to credit bubbles and asset bubbles and manias and eventual bust and panics.
‘The ideologue “regulators” who literally held a chain saw at a public event to smash “unnecessary regulations” are now communists nationalizing private firms and socializing their losses: the bailout of the Bear Stearns creditors, the bailout of Fannie and Freddie, the use of the Fed balance sheet (hundreds of billions of safe US Treasuries swapped for junk toxic illiquid private securities), the use of the other GSEs (the Federal Home Loan Bank system) to provide hundreds of billions of dollars of “liquidity” to distressed, illiquid and insolvent mortgage lenders, the use of the SEC to manipulate the stock market (restrictions on short sales), the use of the US Treasury to manipulate the mortgage market (Treasury will now for the first time outright buy agency MBS to manipulate and prop up this market), the creation of a whole host of new bailout facilities (TAF, TSLF, PDCF) to prop and rescue banks and, for the first time since the Great Depression, to bail out non-bank financial institutions, and a whole range of other executive and legislative actions (including the recent bill to provide a public guarantee to mortgage for banks willing to reduce their face value).
‘This is the biggest and most socialist government intervention in economic affairs since the formation of the Soviet Union and Communist China. So foreign investors are now welcome to the USSRA (the United Socialist State Republic of America) where they can earn fat spreads relative to Treasuries on agency debt and never face any credit risks (not even the subordinated debt holders who made a fortune yesterday as those claims were also made whole).”
Michael Smith:
Government-run, “command” economies don’t work. See the history of the USSR, Cuba, Communist China, North Korea, Mugabe’s Zimbabwe, socialist England, National Socialist Germany, Fascist Italy, etc.
Horse pucky.
The greatest long-term economic growth ever has happened in authoritarian capitalist economies. The Meiji Restoration, the Italian recovery under the Fascists, Nazi Germany, The Wartime Command economy of the USA 1940-48, Singapore under the benevolent despot Lee Kwan Yew, the Korean miracle of the 80s, finally – Rising China 1995-present with a 13% annual GNP growth, eclipsing even Meiji Japan’s.
This growth and huge rise in people’s standards of living is accompanied by immense popular satisfaction with the successful rulers. In 1938 Churchill commented that whatever odious policies the Nazis had, there was no dispute of the economic miracle they achieved or the immense popularity of Party leaders.
It can of course be argued that having such a Command-led capitalist economy contains inherent seeds of destruction as empowered forces involved in the success in turn get out of control…
But as of now, the two nations with the highest growth, greatest rise in standards of living, and the highest approval of leadership by the people (59% and 86%) are Russia and China.
Contrast that with satisfaction levels and GNP growth of Western “free” nations. All under 3%, with satisfaction levels of French, British, American leaders in the 20% range or less.
China is now the part-owner of wastrel debtor America, led by a man that Americans say they dislike more than they dislike Putin.
Democrats and Republicans both had their chances to select serious leaders with serious CEO credentials that do have a very good grasp of finance and turning around failed enterprises.
Mark Warner, Mitt Romney, Michael Bloomberg, Bobby Jindal.
They passed on them.
They went with Jingoism, perceived foreign policy “creds”, and pandering to race and gender.
The economy and the threat to America’s future standard of living were judged “not that important”.
America gets what it deserves in it’s leaders and candidates.
And it is always good to note – especially in a declining but smug and compacent America -that many democracies fail, many great civilizations fall.
And all the time in decline down to dissolution – the citizenry tends to remain deep believers that they have the greatest nation ever, with the best and smartest and hardest working people the world has ever seen, who can out-produce and out-compete anyone. With the most perfect laws and treaties and Constitutions ever gracing sheets of paper.
So CNN spins headlines? I’m not surprised.
On Fox News Sunday Karl Rove said the Obama and McCain were “going too far’ in their campaign ads – that they were both exaggerating some truths when there was no need to.
CNN’s headline about Rove’s comments? “Rove: McCain went ‘too far’
To maintain the pretense of evenhandedness CNN included one line to the effect of “he said the same thing about Obama, too”
Chairman of the Fed serves at the pleasure of the President…
That’s not exactly right. The President nominates the Fed Chairman, who is confirmed by the Senate.
Then he serves for a term in office. Neither the President nor anyone else can fire the Fed Chief. He has independent authority.
Cedarford: Horse pucky yourself.
The Nazi’s wrecked Germany’s economy; real wages in Germany dropped 25% from 1932 – 1938. The “wartime command economy” of the United States from 1940 – 1948 featured mass rationing, wage freezes and the necessity for millions of women to take jobs just to keep food on the table.
The economic growth going on in China and Russia is NOT a result of their “command economy” features; it is a result of the RELAXING and REDUCTION of government command on the economy. And if you believe opinon polls regarding the public’s approval of the leaders of those nations, you are hopelessly naive.
The fact stands that economic progress all across the globe is inversely proportional to the amount of government regulation and statism imposed on the economy involved.
there may be one good outcome of the Lehman etc bankruptcies: the financial markets may become less centred on Wall Street. Some of the recent problems (aside from government meddling) arise from herd mentality, and if the Masters of the Universe are forced to leave New York for Houston and Los Angelas that ‘herdism’ may be mitigated.
The old media (centred, like Wall Street, in New York) may gnash its teeth, but all this is a good thing. The real economic expansion in the US has been moving south and west for decades. Finance and Media are just slower on the mark.
Making money is one of the greatest sources of human inventiveness, which is why regulators will always be behind the curve when a new concept emerges. The concept itself, like junk bonds in the 80s or the bundling of mortgage-backed securities today, may be sound at the outset, and will make their creators gobs of money. It’s the abuse of those creations that follow which usually lead to sector collapses.
This one was even more widespread, since it combined turning homes into bundled commodities with the build-it-to-flip-it-side that led to the regional housing gluts, caused in large part by the government pressure to lower requirements for obtaining those mortgages. The last part, along with falling under the “no good deed goes unpunished” category, also is the law of unintended consequences, though though 3-5 years ago who fought against any reforms of the industry after the first problems with Fannie Mae and Freddie Mac came out shouldn’t be allowed to get away with acting like wide-eyed innocents in this debacle.
Well, Carly couldn’t run a major corporation either, that’s why she got asked to leave HP.