Op-Ed Columnist - The Real Story - NYTimes.com: "Start with interest rates. Those who said the stimulus was too big predicted sharply rising rates. When rates rose in early 2009, The Wall Street Journal published an editorial titled “The Bond Vigilantes: The disciplinarians of U.S. policy makers return.” The editorial declared that it was all about fear of deficits, and concluded, “When in doubt, bet on the markets.”"
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[not GOFACT's -- see NYT "Comments" on the above Krugman article
This is hair on fire moment. You either douse the flames and acknowledge there is a real problem with the economy or you get consumed by the flames and sink further into an economic morass. Based the actions or lack thereof over the last 20 months, don’t expect Obama or his economic team to do anything more than give some inspiring platitudes and soaring rhetoric.
Basically, the real power of his economic ideology stems comes from the nexus of Larry Summers, Ben Bernanke and Tim Geithner. Ever since the Bush team left the scene, we have not changed direction, but preserved the status quo Obama railed against during the campaign Wall St. firms, brokerages, rating agencies, and major banks were either bailed out or paid no real consequences through lawsuits or indictments. Worse yet, the financial reform bill (after 15 months of deliberation by Congress and the financial lobbyists) didn’t address the main issues of too-big-to-fail, moral hazard and lets the banks gamble with the other people’s money through loopholes. It seems nothing has changed since the financial meltdown. This Administration has punted and left the real possibility of another crisis down the road.
When you have two moderate and respected people leave your Administration, it’s either because the ship is going down or they are completely marginalized. Peter Ozag, the OMB Director and Christina Romer, Obama’s top economic advisor, who is resigning in September doesn’t bode well. Who is going to counter Mr. Summer and Mr Geithner? Will Elizabeth Warren be head of the new Consumer Financial Protection Agency?
Lastly, Obama is easily cowed by Conservatives from both parties. The talk of deficit spending held up the renewal of unemployment benefits to thousands of needy American – twice. Not a peep came out of the White House even when most economists agree this is most efficient way to spur the economy and get money to people who desperately need it. When the Republican deficit hawks made exception to the retaining the tax cuts to the top 1%, Obama and his Administration finally had a chance to call them out for their hypocrisy and point out how these cuts will balloon the deficit. What did we get from his economic team – silence that was deafening. We may have two parties, but their interests lie in preserving their wealth at the expense of the people on Main St.
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