WHAT THE SCOTT BROWN VICTORY SAYS ABOUT THE ECONOMY
While most pundits are inclined to view Scott Brown’s Senate victory in Massachusetts as a referendum on President Obama’s healthcare plan, I view it as a sign of increasing anger over the state of the United States economy. President Obama swept into office on the back of “change” and “hope”. Although there has been an overwhelming amount of hope, there has been almost no change since taking office one year ago.
While the economy continues to suffer President Obama continues, with laser-like tunnel vision, to focus on the healthcare bill. At a time when 10% of American’s are out of work, bankers are receiving record bonuses and the government debt spirals out of control, the President is focused on a bill that will likely raise taxes and increase overall spending. Americans don’t think that makes one bit of sense and they’re exactly right.
It’s time for President Obama to wake up and realize that his economic team is failing him. We are repeating the mistakes of the past and the great reflation experiment is not working for the average American. This policy of print and spend hasn’t worked in the past and it’s not working now. The same men who helped get the economy into this mess (the bankers, Geithner, Summers, Bernanke, etc) are the same men who are going to bury his re-election hopes in 2012 if he doesn’t start reshaping his focus.
Spot on.
Obama is screwed. He has all the same Keynesian fools in office that helped steer the economy off the cliff over the last 10 years. Why will it end differently this time?
TPC,
If you can come up with a credible policy alternative, I want to hear it. I don’t think there is one. The past year has been for saving the financial system. I don’t think the banks should get a penny of bonuses, but remember how hard it was to pass Tarp? Congress would not go for it. Who would pass it. Obama has done was is possible. Is it ideal? No. Could anyone do better? I doubt it.
TPC Reply:
January 19th, 2010 at 7:06 PM
At the time, I called for massive regulatory changes and a full on attack of the toxic assets and the debt problem. I also called for triage in the banking system and an RTC type approach.
None of this has been done. We have wasted one of the great financial crises of our time. What has changed Paul? Do you really believe everything is better now? You don’t think we’ll confront these same problems at some point in the next decade?
We had the opportunity to squash these banks, reduce the debt and rehaul the regulations. We failed and the American people are pissed about it.
Now, it’s business as usual for the banks and the U.S. people have spoken via this election.
dama1000 Reply:
January 19th, 2010 at 7:27 PM
well said
cc Reply:
January 20th, 2010 at 12:35 AM
totally agree…
fix the problem rather than hiding it.
TPC, my longtime “friend” and a person who I respect deeply. One of these days I hope you let some of your frequent commenters get together for a beer or two.
They are both intertwined brother. Trust Reagan, trust Lincoln, the American people are not fucking stupid and they could smell this shit a mile away.
This is a complete attack on the whole frigging agenda of the dems. What, the average American has to balance their checkbooks and the pols and the bankers can do whatever the hell they want?
I want to thank you for putting this up front and center. this is why your blog is one of the best. peace brother.
“At the time, I called for massive regulatory changes and a full on attack of the toxic assets and the debt problem. I also called for triage in the banking system and an RTC type approach.”
-That I agree with. However, it is a joke for the Republicans to point fingers. It is even more of a joke on the gullible that the Republicans in charge will change anything.
-Really, what have they provide as the remedy?
-Did the Republicans provide any solution to the banks?? It seems they are more protect of the banks than the Democrat. Gramm–Leach–Bliley_Act was proposed by 3 Republicans and 1 Dem. Links http://en.wikipedia.org/wiki/Gramm%E2%80%93Leach%E2%80%93Bliley_Act.
Quote
“The House passed its version of the Financial Services Act of 1999 on July 1st by a bipartisan vote of 343-86 (|Republicans 205–16; Democrats 138–69; Independent/Socialist 0–1),[3] [4] [5] two months after the Senate had already passed its version of the bill on May 6th by a much-narrower 54–44 vote along basically-partisan lines (53 Republicans and one Democrat in favor; 44 Democrats opposed)”
-Scare about debt? Apparently the Republican didn’t when they passed a TRILLION tax cut spending, then hundreds of billions in stimulus, then prescription drug plan. They just learn how to balance their checkbooks? You mean putting military costs as the UNEXPECTED supplemental request for the last 7 years doesn’t work?? They Republicans are OK even to run the deficit as long as there are tax cut.
-If government run health care was so bad, maybe those Republicans in Congress should get a freaking private one. You see that?? I don’t.
So pardon me if I see through the BS.
TPC Reply:
January 19th, 2010 at 8:17 PM
I know the urge is to turn this into a Dem vs Rep thing, but that’s really not it. I was highly critical of the Republican approach to the crisis in 2008 and I have been a long-time opponent of Bernanke and his approach.
This Dem vs Rep debate takes the focus off the real problems. This country is financially incompetent and it starts at the top. The policy mistakes began with Clinton, were perfected by Bush and continue with Obama.
I could care less whether a Republican or a Democrat gets our financial house in order. I just want someone with some fortitude to make the hard decisions that the bankers won’t like. Bush wasn’t that guy and it looks like Obama isn’t that guy either.
prescient11 Reply:
January 19th, 2010 at 8:41 PM
Agreed 100%.
Henry Reply:
January 19th, 2010 at 8:44 PM
I am NOT saying it’s you, TPC. I am just tired of all the constant propaganda that acts like the Democrat or Obama is responsible for this collapse and the Republicans will save the days. People are idiot. Dont’ get me wrong, I think Obama is partially responsible. I think his approach is wrong. He should have focus on the fixing the financial in the first place. I really like your blog because of your *real numbers* approach. And I TOTALLY AGREE with you on your assessment regardless of Democrat or Republicans. We should watch WHAT THEY DO, instead of what they say.
Frankly I think people are idiot or being manipulated. All these Republicans talk big but they were the one contributing to create the problems. Like I said, they didn’t care about the deficits and the future debts when they passed that TRILLION dollars tax cut. Just don’t act like a responsible spender now.
Like a trader’s saying “Trade the chart, tune out all the BS” or the saying “Don’t listen to the commies talk, watch what the commies do”
Paul Reply:
January 20th, 2010 at 9:55 AM
I agree 100%
TPC, You are effectively condoning and justifying the mauling of the Obama administration here. Are you really saying that McCain would have passed serious financial reform? What a joke. It was Phil Gramm, that lying scum, that set the stage for this crisis.
What I think should happen is the following: The government has to reassert its authority and sovereignty (i.e. of the people, by the people) over the banks. That means it takes the whole bonus pool away to pay down its costs. The banks are acting like they’ve earned their bonuses, where they haven’t earned anything!!
This is a dems/repubs issue, whether you like it or not. Closet conservatism does not fiscal policy make!
TPC Reply:
January 20th, 2010 at 10:09 AM
And Obama deserves to be mauled. After running on a platform for the little guy and then handing the banks billions on a silver platter? He should be ashamed.
How could such an intelligent man appoint Geithner to Treasury Sec when we all know Geithner was the fox in the hen house? How can he appoint Summers when we all know Summers had a hand in causing this mess?
Trust me – Obama’s economic team is burying him and he can’t control it. The sooner he realizes he has a crisis on his hands the sooner he’ll wise up and take a stand against the banks and the Fed.
Paul Reply:
January 20th, 2010 at 9:56 AM
Also, if you listened to Coakley, you’d understand immediately that the pin-up boy would win by a mile. She’s the worst candidate I’ve seen since Kerry! This is not a referendum on Obama!
TPC Reply:
January 20th, 2010 at 10:03 AM
Let’s just get this out there – I voted for Obama. I am a fiscal conservative living in southern CA so come to your own conclusions here….
I try not to make everything so black and white/Democrat and republican because I don’t think the world is a black and white place. Although most people like to take sides I believe you have to consider the circumstances. It’s no different than believing buy and hold will always work. It depends on the scenario.
I have voted on both sides of the aisle. I didn’t vote for McCain because I truly thought he had no clue about the economy. Obama is proving just as ignorant.
If you don’t think this is a referendum on Obama then I think you need to pull the wool from in front of your eyes. People are fed up with bailouts and the big banks. We have printed and spent trillions and what has it gotten us?
Nothing.
Paul Reply:
January 20th, 2010 at 11:31 AM
I just don’t agree. I strongly dislike Summers. Geithner I’m fairly neutral about–though I don’t think he’s by any stretch of the imagination a liberal/progressive person. Both are accepatable to the business establishment, and they engineered a huge melt-up in American’s portfolios. I don’t think you can discount this. This melt-up made it possible to get the economy moving again from what was serious cardiac arrest.
Now, if you think that Obama could have gone face-to-face with Wall Street and won, I think you’re mistaken. They would have been happy to take everyone down with them. After all, they’re just money managers. Seriously. And you fail to consider what Obama had to do to quiet the Chinese on American bonds.
Seriously, I think your expectations are out of line with the realm of possibility.
TPC Reply:
January 20th, 2010 at 11:57 AM
So let me get this straight –
We couldn’t have forced more of the big banks into an RTC type/FDIC receivership program? We couldn’t have focused the stimulus on the real economy? We couldn’t have used TARP for its intended purpose – to remove the toxic assets? We couldn’t have passed regulatory reform by now? We couldn’t have curbed banker pay after they took billions in taxpayer dollars?
You make it sound like everything is fine because the stock market has rebounded. That’s the same mentality everyone had in 1999 and in 2007. Everything is fine so long as you look at the market and ignore the real structural problems.
That’s just it though Paul. None of the underlying structural problems have been resolved.
I think you’re defending Obama for purely political reasons and ignoring the fact that he has done nothing to resolve the financial crisis. Perhaps he will get lucky in 2012 and the economy won’t roll over again, but without serious changes he will go down as another goat like GW Bush because he refused to make real changes in our flawed approach to the economy.
michael Reply:
January 20th, 2010 at 4:59 PM
Interesting to know.
I voted for McCain because I am certain he has some principles. Still not sure if Obama has any.
However, if at that time I had already known the history of McCain advisor Phil Gramm, I would likely have written Ron Paul’s name on my ballot.
tradeking13 Reply:
January 19th, 2010 at 8:44 PM
It isn’t a Democrat vs. Republic referendum — it’s an Incumbent vs. Challenger referendum. Incumbents are so screwed!
Henry Reply:
January 19th, 2010 at 8:57 PM
it is so true. But if the challenger belongs to the incumbent groups that contribute to the crisis..What really change?? That’s why I am saying, watch what they do instead of listen to them talk
I still prefer 3rd & 4th party in Congress but that is asking for too much as of current time
TPC, this is why I have always loved your blog and insight.
This is a groundswell that is only beginning to manifest. I am a son of a Southern-Baptist preacher, who had nothing and was born to nothing, and have established a very good living for myself and my family.
I worked three jobs through college and my higher education.
And I AM FED UP WITH THE ABSOLUTE BULLSHIT we are being fed by the elite in Washington and everywhere else. BALANCE THE DAMN CHECKBOOK.
Americans know in their minds, hearts and that secret place that everyone knows is FUBAR right now. We cannot run ridiculous deficits for too long.
It breaks all parties down. MA is just the beginning. They better wake up. People are not stupid and this is just the start, imho. Major changes are afoot.
EmilyP Reply:
January 19th, 2010 at 9:39 PM
There is no way Obama is giving up on the health care plan. He will tax and spend us all to death. When will they get it? You can’t spend your way to prosperity?
Who cares if we have a great health care plan if 20% of the country doesn’t even have a job?
Paul Reply:
January 20th, 2010 at 9:58 AM
Emily,
You were already taxed to death to pay for an illegal war with costs that weren’t included in the budget lines by the Bush administration. If you’re worried about being taxed so much, you should bother to find out what is the largest portion of the US budget (except the american pension plan, SS): Defense!
This healthcare bill will lower healthcare costs. All the hyperventilation about deficits on Fox will not change that.
TPC Reply:
January 19th, 2010 at 9:49 PM
This is an American problem. We’re all in this together. People are tired of running massive debts, printing money, the boom bust policy and seeing the Chinese eat our lunch. All while the politicians spend money on fruitless endeavors. Don’t get me wrong – health care is great, but we have more important problems to attend to right now. Emily is right. Who cares about health care when a huge amount of the country is out of work? Who cares about health care when China is slowly taking over the economic world? A little perspective from these people would be nice.
Does everybody in America where blinders now? This whole thing as nothing to do with Obama or this fool who got elected tonight Scott Brown. It has to do with two completely corrupt and incompetent Political parties and their elected members, the DNC and RNC, that have somehow brainwashed the American people into believing THEY ARE the US government.
They have violated their oath of office and the Constitution numerous times. They have committed fraud and regularly accept bribes that they and the media euphemistically call campaign contributions. Does Goldman Sachs contribute $20 million a year to political parties and candidates because they believe in Democracy? How stupid are we?
These same political parties along with their hacks in the SEC, The Dept. of Interior, The Federal Reserve, HUD, etc. have plundered the Social Security system built up $14 trillion of debt on the books and and another $40 trillion off the books. Can anybody see any evidence that rusted out, bombed out, bankrupt America has spent $54 trillion on anything. Where is the money can anyone tell me.
Americans are dumb and getting dumber everyday. I’ve eaten Caesar salads with higher IQs then half of America and that’s just the half that are not alcoholics or on anti-depressants.
What’s going on is about total corruption, a somatized, brainwashed populace and the slow motion collapse of an empire. And nothing can or will save it.
I don’t think the american people are dumb and getting dumber everyday. That kind of analysis misses the point. The american people are bright enough to figure out when they are getting screwed and usually throw the bums out, just like 2006-2008 and just like the people of Massachusetts just did. If the republicans retake both houses of congress and act like they did 2001-2008 then the same thing will happen to them in 2012. I don’t think the american people are dumb, we are very angry but we still hope for a government of the people by the people.
The way I see it, as a nation we have been digging ourselves into a hole for at least the last 20 years. Republican or Democrat, it just didn’t seem to matter. Following the November elections we now find that the only CHANGE we got is that now we have a bunch of elected officials who seem to want to dig faster. If the election of Scott Brown does little else, it should slow down the digging.
Now the question for me comes down to whether or not the whole is to big for us to get out of.
Personally, I think the secondary impacts of Brown’s win will be more interesting that whatever happens with healthcare! Most notably:
- Less room for Helicopter Ben to print money (it’s not popular, except with those banks, damnit!)
- Some level of forced austerity in the budget (still a big deficit, but perhaps not an ever growing one)
- End of Stimulus Mk II talk
- The second downward leg of the W, as we discover (surprise surprise) private sector demand doesn’t exist to pick up the baton.
Henry Reply:
January 20th, 2010 at 12:18 PM
this is the idea that i am trying to prove a fantasy
“- Less room for Helicopter Ben to print money (it’s not popular, except with those banks, damnit!
- Some level of forced austerity in the budget (still a big deficit, but perhaps not an ever growing one))”
Because a Republican elected they’ll get fiscally responsible? How? By their record in their own states and the last 10 years? Remind me who voted for a TRILLION spending of money we didn’t have in 2001? Who voted for a stimulus in 2007? and the prescription drugs plan? Who voted for TARP in 2008?? How did the price of gold go from roughly $300 to $900 during the last 10 years..Because the Republicans being fiscally responsible??..How about showing me where the Republican ACTUALLY being fiscal responsible.
Watch the actions and tune out the BS!!
TPC Reply:
January 20th, 2010 at 12:22 PM
No one should be saying the Republicans were any better. This is why politicians get nothing done. They spend all their time pointing fingers and trying to get re-elected as opposed to actually solving problems.
Both parties are to blame. That’s a fact. Now let’s move past the finger pointing.
One of them has the opportunity to fix the problems….No one is picking up that ball and running with it. Yet.
Henry Reply:
January 20th, 2010 at 12:30 PM
TPC, like I said *watch the action*. I am just trying to prove a false expectation that because Scott Brown being elected that somehow we won’t be printing more money. That money printing problem was there during the Republicans and Democrats. So please, stop the idea that because a Republican got elected all that was going to change. This problem is beyond party line.
TPC Reply:
January 20th, 2010 at 12:33 PM
I never said we would stop printing money. There is no way we can afford to do that.
But this is hopefully a step in the right direction towards reigning in the banks and getting the deficit under control.
Henry Reply:
January 20th, 2010 at 12:39 PM
let’s hope so…Until I see some ACTION in that direction, all this talks is hope. But i highly doubt that this will change. This running deficit has been for the last 30 years by both party and both party are still in charge…
Doing the same thing and expect different result?? I’ll believe when I see it.
Our Man in NYC Reply:
January 20th, 2010 at 12:42 PM
Henry — I guess I read the MA vote as an anti-incumbent vote, NOT a Republican/Democrat thing or an Anti-Obama vote (he actually exit polled reasonably well in MA, and also in VA/NJ previously).
And because it’s an anti-incumbent vote AND an election year; I suspect you get a whole lot of nothing…
i). Healthcare: Something will be passed, it’ll either be the Senate bill (if the Dems are smart) or something very watered down and pointless.
ii). Stimulus II is dead because it’s not in anyone’s political interests to do it. Yes, they’ll get to fudge around the edges with things that are popular (extending unemployment benefits, again, etc).
iii). Budget Deficit/Spending Cuts
The Independent/Youth nos were terrible — also from the exit polls, deficit reduction was everywhere. I think given it’s an election year, we hear lots of talk/leaks over the summer about Rahm clamping down on spending…proposing cuts to budget, etc. but see no real action. I suppose that’s an incremental positive on the deficit side.
iv). Bailouts/FED/Geithner
The wild card — it’s clear people hate the Banks (rightly or wrongly) and blame them, and also seem to realize the FED’s printing press is working (I’m surprised by non-financial friends who say this!). I suspect the only impact is that QE will actually end in March/April. I do think Geithner goes (to be replaced by Bair) as the fall guy, in Q2 (so it doesn’t look knee jerk).
v). The second leg of the W will come (after end of QE, and no Stimulus II)…maybe Obama does it right this time. Probably not, but you never know.
Henry Reply:
January 20th, 2010 at 12:46 PM
Our Man in NYC
I guess my main point is…I don’t believe anything will change until i see some ACTION from either party to curtail the deficit and CUT spending. All they do is spend spend spend. Fool on us for select those 2 whose proven track record was spend spend spend and expect different outcome.
Our Man in NYC Reply:
January 20th, 2010 at 1:45 PM
Fair point; I’m guess I think (or am hoping) that the anti-incumbent feeling (and their survival instinct in an election year) may kick some sense into them.
Henry Reply:
January 20th, 2010 at 12:26 PM
btw, there are a lot of money printing was done in 2008…Maybe you could remind me what are the Republicans proposals to fix this crisis…curtail the banks? reinstate Glass Stegal Acts which they proposed to repeal??…Cut spending? Cut military spending? Reduce pensions? Please do tell me because I see them talk but NO action.
One thing did seem somewhat clear to me – Ms. Coakley was a more credible financial sector reformer than Sen.-elect Brown appears to be. I think these results are being over-interpretted. The only thing that clearly emerged was that there was a special election and the president and the Senate Democratic leadership’s job just got tougher.
Neither party has very reliable principles, except for the ones that are bad.
I slightly disagree. People like Simon Johnson and Dean Baker say that the rise in health care costs is a massive time bomb that weighs heavily on all budgets. But, obviously, he went the wrong way about fixing.
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