Last Call

The week ahead includes Obama on the world stage not once, but twice: the annual meeting of world leaders at the UN on Tuesday and Wednesday, and the G-20 summit in Pittsburgh on Thursday and Friday. The "liberal media" at Reuters seems to think he's already dropped the ball on foreign policy however.

Obama got a rapturous welcome overseas when he succeeded President George W. Bush eight months ago, winning plaudits for his rhetorical gifts, his multicultural background and his promise to break with Bush's unpopular go-it-alone style.

He has made major strides toward keeping his pledge to restore Washington's reputation abroad, but analysts say he needs more concrete results to show for it.

Really? Compared to Bush, Obama's still lacking on foreign policy?

Analysts said Obama's weaker domestic popularity probably would not undercut his leadership at the United Nations and G20. But there will be less of the euphoria that marked the summits of his first months in office, including a whirlwind European tour in April where he got a rock-star reception.

"We are past this euphoric moment where the president is making his introduction onto the world stage," said Heather Conley, a European affairs expert at the CSIS think tank.

"As we transition from this great euphoria, I think we're starting to see a little bit of disquiet set in," Conley said, adding that European leaders were impatient for Obama to "turn details into action" on climate change and financial reform.

Eight months in and Obama has not only failed to solve America's problems, he has failed to save the entire world's problems too. What a lousy guy!

With the G20 set to consider ways to revive the stalled Doha round of world trade talks, Obama's decision to slap new tariffs on Chinese tires is expected to hamper his ability to lead a call against protectionism and has upset Beijing.

James Lindsay, a former Clinton administration adviser, said Obama would receive a warm reception from foreign leaders but "reality is setting in."

"Expectations for what President Obama was going to deliver were far too high," he added. "The reality of the presidency is that the moment he starts to make decisions, he starts alienating people."

"There's always going to be disappointment because countries have read into Obama all of their hopes and dreams," said Lindsay, who is now at the Council on Foreign Relations.

In other words, Obama's failure to fix the planet in eight months is his fault, even though he's made progress. But you see, he's already blown it. Reality is that he's not a superhero. Yeah, I still say he's got a long way to go on the economy, but name another President in living memory who had this much dumped on him in the first eight months, two wars, a functional global economic depression and an opposition party that despises him to the point of derangement.

Boy, that pesky liberal media just sugar-coats everything, don't they? The Already Failed Obama Presidency meme rolls on. What he has done he'll never get credit for, and what he hasn't done he'll get blamed for.

Incremental Changes

Via Crooks and Liars, we learn Obama has gone from "We must look ahead, not backwards" on the CIA probe to merely benign indifference.

An investigation into abuse of terrorism detainees won't be halted following a letter sent to President Barack Obama by seven former CIA directors. "I don't want to start getting into the business of squelching, you know, investigations that are being conducted," Obama told CNN's John King Sunday.

"I appreciate the former CIA directors wanting to look after an institution that they helped to build," Obama told CBS' Bob Schieffer in a separate interview.

Which is all Obama can really do. A full-throated call for investigations will only earn him the ire of the entire Washington establishment.

Of course, allowing the investigation to proceed will still do just that, only it will take longer. Still, Obama is going to have to take a public stand on this issue at some point.

The Lesson Of The Leak

Me, this morning:

The leak basically assures that Paterson will not go quietly, because he's been made to look like an idiot publicly.

David Paterson's office this afternoon:

Appearing tired and agitated at a parade in Harlem on Sunday, the governor told a crowd of reporters that he would not abandon his campaign to seek a full term.

“I have said time and time again that I am running for governor next year,” he said at the 40th annual African-American Day Parade.

Mr. Paterson would not characterize what he was told by the White House, saying that he would not “discuss confidential conversations.”

“I’m not talking about any specific conversations,” he said. “As I said, I am running for office.”

It's almost like this leak was done deliberately for maximum damage to Obama, Paterson, and the Democratic Party.

Yay liberal media.

What Recovery?

Expanding on the post below, Tyler Durden at Zero Hedge has an outright depressing look at the possibility that the housing market will not recover to 2006 levels in some parts of the country until the 2030's.

The reality is that even as the broader economy still suffers under record excess slack, and one could easily disagree with Moody's on their rosy expectations for a broad economic turnaround, even the permabullish rating agency has to acknowledge that there is simply no demand to satisfy the glut of overbuilding seen during the bubble years. Between these two pillars of household net worth: the economy (traditionally manifested in the stock market, although no so much lately) and housing, the US consumer will likely be forced to continue retrenching for decades to come, which makes any talk of a V-shaped recovery, even ignoring for a moment the temporary impact of government stimuli, moot.

Additionally, Moody's analyzes the expected "rebound" by geographic region, with an overall expected return to a "peak" level by 2020.

Hard-hit states such as Florida and California will only regain their pre-bust peak in the early 2030s, well after the nation does. New York will also be a laggard, although its overall decline in prices will be less severe. The main constraint on New York's outlook is Wall Street. In general, the length of the downturn and the length of recovery in a region will depend on the degree of aggressive lending or overinvestment in housing that occurred during the boom. On the recovery side, states with weaker job growth will also take longer to return to peak.

Then again with Moody's unprecedented track record of being wrong on everything, it would not be too surprising to see a compressed housing bubble peaking some time next year, comparable to what has been seen in Hong Kong, where the population has already forgotten about the excesses of two years ago and is bidding up matchbox apartments into the stratosphere. With the US economy now able to sustain only by creating and popping various asset bubbles, perhaps the best thing for America would be to go through one more quick housing ramp, followed by an even quicker crash, which would likely be the last one in the history of this once great country, as it would end with a completely worthless national currency and a decimated middle class.

So, we're basically either looking at 20 years of hurt, or a super-accelerated housing bubble that packs 20 years of hurt into say, the next two years.

Which one's worse? Can we prevent either?

I'm thinking we've still got a lot more downside to slog through, despite the stock market ramping up this year. It is unsustainable and the market will crash again, it's just a question of how soon and how violently.

Should everything crash at the same time, residential real estate, commercial real estate, the stock markets and the dollar, then yes, that's worst-case scenario time. And God help me, but that may actually be better for us in the long run.

Job Approval Numbers

President Obama is publicly saying that job growth will not really be in the picture until at least 2010. I appreciate the new "honesty" thing he's got going here on the economy.

"I want to be clear, that probably the jobs picture is not going to improve considerably -- and it could even get a little bit worse -- over the next couple of months," Obama told CNN chief national correspondent John King in the interview, conducted Friday.

Obama explained that he believes the economy will be creating jobs through the end of 2009 -- but not enough to keep pace with population growth nor to make up for steep losses in employment that occurred earlier this year.

"I think we'll be adding jobs, but you need 150,000 additional jobs each month just to keep pace with a growing population," the president said. "So if we're only adding 50,000 jobs, that's a great reversal from losing 700,000 jobs [a month] early this year -- but, you know, it means that we've still got a ways to go."

He called the issue "something that I ask every single one of my economic advisers every single day, because I know that ultimately the measure of an economy is, is it producing jobs that help people support families, send their kids to college?"

"That's the single most important thing we can do," Obama said.

And quite frankly we need more than 150,000 a month growth, we really need something in the neightborhood of 300K new jobs a month to get the unemployment rate down. All 150K new jobs a month would mean is that the unemployment rate would remain where it is, that's the break-even point.

And that kind of job growth simply isn't going to happen. The reality is we're going to be in the economic doldrums for several years. Steve Clemons takes Obama to task on this:

In January and February of this year, the President committed himself to a jobs creation plan of approximately four million jobs in created or saved jobs by 2011. We are no where near on that course. In February, Paul Krugman warned that the so-called economic recovery plan tweaks were already reducing the job-creating element of the stimulus package by between 600,000 and 1.2 million jobs.

The economy is in lousy shape still -- though we are going to see robust third and fourth quarter upswings in the GDP -- but this is GDP growth without job growth. . .and that is what economic advisers to Obama who are Wall Street-centric have scripted.

Lawrence Summers needs to get out of the White House more -- and get to something other than fancy DC parties where folks fawn over him. He needs to go to heavily impacted communities where foreclosures and joblessness are high and needs to deal with the fact that the reflation of Wall Street has come at the expense of generating balance in the lives of average Americans.

A GDP recovery, which we are going to get -- is something that the President of the United States should be apologizing for and for which he should be holding his economic team accountable. An uptick in GDP without growth in employment should not be treated as positive news.

The outcome we are getting on a no-jobs recovery was a "policy choice" - and we need to make better choices from this point forward.

Agreed. A jobless recovery at this point is a policy choice of Wall Street over Main Street. Obama's economic team is making things great for bankers and stockbrokers and the burdened rich who have to put off their mani/pedis to a barbaric monthly basis rather than bi-weekly. The rest of us? We're searching for ways to spice up our ramen noodles and watching Hormel Foods put in significant earnings numbers because Spam and Dinty Moore sales are way up.

And for the record, diced Spam fried up, a can of Hunt's sauce, and a box is spaghetti is two dinners worth of food for $4.50.

Read more at: http://www.huffingtonpost.com/steve-clemons/obama-not-doing-well-enou_b_292646.html

Put-Upon Paterson Punted?

The big political story this morning is a NY Times report that President Obama, as head of the Democratic Party, has asked embattled and highly unpopular NY Democratic Gov. David Paterson not to run for re-election next year, a governor so unpopular that the White House wants him to announce his lame duck status now because Paterson may damage the party's statewide chances this year to boot.

The decision to ask Mr. Paterson to step aside was proposed by political advisers to Mr. Obama, but approved by the president himself, one of the administration officials said.

“Is there concern about the situation in New York? Absolutely,” the second administration official said Saturday evening. “Has that concern been conveyed to the governor? Yes.”

The administration officials and the Democratic operative spoke on condition of anonymity because the discussions with the governor were intended to be confidential.

The president’s request was conveyed to the Mr. Paterson by Representative Gregory W. Meeks, a Queens Democrat, who has developed a strong relationship with the Obama administration, they said.

The move against a sitting Democratic governor represents an extraordinary intervention into a state political race by the president, and is a delicate one, given that Mr. Paterson is one of only two African-American governors in the nation.

But Mr. Obama’s political team and other party leaders have grown increasingly worried that the governor’s unpopularity could drag down Democratic members of Congress in New York, as well as the Democratic-controlled Legislature, in next fall’s election.

Mr. Paterson and his aides did not respond to repeated requests for comment Saturday. Mr. Paterson arrived on Long Island Saturday evening to attend a dinner, but walked hurriedly past a reporter who tried to ask him about the White House request.

An aide to Mr. Meeks said the congressman could not be reached Saturday.

“The message the White House wanted to send — that it wants Paterson to step aside — was delivered,” said the Democratic operative,, who spoke on condition of anonymity because the discussions were intended to be confidential. “He is resistant.”

The leak basically assures that Paterson will not go quietly, because he's been made to look like an idiot publicly. It also makes the Obama administration look almost Bush-like in its ham-handedness of the situation. Paterson's latest numbers look like Bush's numbers at the end of his term, his job approval rating is in the low to mid 20's at best, and it hasn't helped that Paterson has basically screwed up everything he's touched, from Wall Street to appointing Hillary's replacement in the Senate to botching the state's budget. Even Ahnold has a slightly higher approval rating than this guy among embattled Governors. In a state that was hoping for Hope and Change, they got a mildly incompetent surprise centrist who's backing Wall Street, not Main Street.

Still, there's no way this leak helps Obama or Paterson, so you knew our "liberal media" was going to weigh in on it. I wonder who will call Obama a Machiavellian fascist dictator first?

This Week's Busted Banks

We're rapidly approaching the hundred mark this year, including the first bank to go under this year here in Kentucky.

Two more US banks have closed down -- including the sixth largest bank bankruptcy this year -- to bring the total number of bank failures this year to 94, according to the government banking insurer.

The Indiana-based Irwin Union Bank was shuttered with a total of 2.7 billion dollars in assets and total deposits of some 2.1 billion dollars, the Federal Deposit Insurance Corporation (FDIC) said in a statement Friday

In the same group, the Kentucky-based Irwin Union Bank failed with assets of 493 million dollars and total deposits of some 441 million dollars.

The institutions were banking subsidiaries of the Columbus, Indiana-based Irwin Financial Corporation.

With 27 branch locations between them, the two banks are set to reopen under regular business hours Saturday as branches of First Financial Bank, with deposits continuing to be insured by the FDIC.

After suffering no bank failures at all in 2005 and 2006, the US banking system saw three banks going under in 2007, followed by 25 in 2008.

With the bankruptcies Friday, the institutions brought the number of bank failures this year to 94 -- highlighting the extreme stress that the global financial crisis has placed on US banking institutions.

The forced consolidation of the industry continues. Competition vanishes, and banks that are too big to fail only get bigger.

Soon the too big to fail banks will basically be the only banks left at this rate. What then?