Obama and the Oddsmakers

Published on January 31, 2009

A betting man, the morning after Obama’s inauguration, would surely have found odds-on stakes that the new president’s first daring cavalry charge would be an assault on the economic crisis, worsening day by day. Our Wednesday-morning gambler would have found much longer odds being offered on any surprising moves in that graveyard of presidential initiatives sign-posted “Israel-Palestine”.

BY ALEXANDER COCKBURN
Counterpunch
INTERNATIONAL
Posted by Bulatlat

But there’s been no exciting surprise or originality in Obama’s opening engagements with the reeling economy. His team is flush with economists and bankers who helped blaze the path to ruin. He’s been selling his $819 billion stimulus program on the Hill, with all the actors playing their allotted roles and many a cheering Democrat not entirely confident that the House Republicans may not have had a point when, unanimously, they voted No on the package

America’s economy may be so hollowed out, its industrial base so eroded by twenty years of job exports to China and other low wage sanctuaries, that a bail-out may not turn the tide, Then the Republicans will have their told-you-so’s primed and ready to go in the mid-term elections.

But Obama can scarcely be blamed for putting up his $819 billion pump primer. It was a given, from the moment he got elected, and indeed probably owes, both in its good and bad components, more to Rep Charlie Rangel, chairman of the House Ways and Means Committee, than to Geithner or Summers.

Obama’s timid folly comes with the impending $2 to 4-trillion bailout package for the banks, signaled by Treasury Secretary Geithner. If anything can make Wall Street smile bravely through the hail of public ridicule for the way it’s been handing out the previous wad of bail-out money in the form of bonuses, it’s the prospect of getting further truckloads of greenbacks to lend out to Americans already crippled by debt.

As the economist Michael Hudson puts it in his trenchant piece on this site this weekend, “The government’s solution, placed in its hands by the financial lobbyists, is to bail out the bankers and Wall Street while leaving the ‘real’ economy even more highly indebted. Families, businesses and government are having to spend more wage income, profits and tax revenues on debt service instead of buying goods and services. So why is the solution to this debt overhead held to be yet MORE debt? Is there not something crazy here?”

Worse still, Obama’s economic team is alerting reporters to the administration’s increasing enthusiasm for a so-called “aggregator” bank that would take over the banks’ worst assets. Thus would the new administration play along with the Bush-Paulson script, allowing Wall St to dump its problems in the taxpayers’ laps and go on its merry way.

This is not a long-term cure, and leaves ordinary Americans drowning in debt, as before. It provides temporary relief to the big financial outfits on Wall Street which are, after all, the largest political campaign contributors and lobbyists. No doubt the unusually harsh denunciation by Obama of Wall Street’s $18 billion bonus payouts as “shameful” and “the height of irresponsibility” derive some of their edge from the fact that the bonuses make it harder for him and Geithner to sell yet another vast, extremely shameful multi-trillion giveaway to the banks.

So Wall Street can feel satisfaction that its investment in Obama seems to be paying off. Can the same be said of the Israel lobby which rewarded Obama’s tireless blandishments last year with enthusiastic pre-election endorsements, to the effect that here was a true friend of Israel.

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