In Which Bill Greider Talks Me Back Up

While BooMan does have an excellent point that Obama has things under control for now with a pragmatic, thoughtful, and careful approach with the goal of paving the way for long-term change, The Nation's Bill Grieder argues that the time for caution is long past and that only radical and immediate change will save the country, especially on the economy.

This is not the last word and things are changing rapidly. But Obama's choices have begun to define him. His victory, it appears, was a triumph for the cautious center-right politics that has described the Democratic party for several decades. Those of us who expected more were duped, not so much by Obama but by our own wishful thinking.

Let us stipulate that these are all honorable people, smart and experienced veterans of Washington combat. But they represent the Democratic party that mainly sees itself as managerial--making government work better. The long era of conservative dominance has taught them to keep their distance from big reform ideas that promise fundamental change of the system. Their operating style is incremental and cautiously practical. They conscientiously avoid (or actively block) propositions that sound too liberal or radical. Alas, Obama is coming to power at a critical moment when incrementalism is irrelevant. The system is in collapse. Financial chaos won't wait for patient deliberations.

Events have confronted Obama with a fearful symmetry between past and present, illustrated by his choice of economic advisers. On Friday, we learned that Timothy Geithner, president of the New York Federal Reserve, would become his new treasury secretary and Larry Summers, who held the same position in the Clinton administration, would be the White House overseer of economic policy. On Monday, Geithner was busy executing the government's massive rescue of Citicorp--the very banking behemoth that Geithner and Summers helped to create back in the Clinton years, along with Federal Reserve chairman Alan Greenspan and Robert Rubin, Clinton's economics guru. Now Rubin is himself a Citicorp executive and his bank is now being saved by his old protégé (Geithner) with the taxpayers' money.

The connections go way beyond irony. They raise very serious questions about where the new president intends to lead and whether he has the nerve to break from the weak and haphazard strategy of the Bush administration. It has dumped piles of public money on the largest financial institutions and demanded little or nothing in return, hoping for the best. Geithner has been a central player in the deal-making, from Bear Stearns to AIG to Citi. The strategy has not only failed, it has arguably made things worse as savvy market players saw through the contradictions and rushed out to dump more bank stocks.

One of these two strategies is going to go by the wayside very quickly unless Obama can manage the impossible: radical, fundamental and complete transformation of our economic system while at the same time maintaining a broad enough coalition of GOP moderates and Blue Dog Democrats to ram through the changes.

And yet the impossible is exactly what Obama will have to achieve, and quickly. Anything less than a total paradigm shift of America's economy will result in the current long-term global recession becoming a disastrous global depression.

It's a daunting prospect to say the least. I don't have the solution to the problem, either. I know where we should start, but it's where we end up that is the important part.

Still...Obama is all we have right now.

In Which BooMan Talks Me Down

As downright pissed as I am about Obama's cabinet selections, the always dependable BooMan offers up some of his usual trademark expert analysis on why I should relax and let Obama do his thing.

Which gets me back to Barack Obama. Obama has not called for an American retreat from the world stage or a radical upending of our foreign relations. He recognizes that our involvement in the Middle East creates problems and blowback, but his solution is cautious and designed to work over a period of time. After stabilizing the financial markets, his number one domestic policy is going to be a green-economy initiative to take some of the pressure off our dependency on Middle Eastern energy. That will give us a freer hand to take risks that might involve a period of regional instability. In the future we might feel secure enough to allow the Saudi regime, for example, to be swept away in a popular uprising. Right now, we'd be too concerned about disruptions in the oil supply to let that happen.

When it comes to Israel, listen to the advice that Scowcroft gave in his August 2002 opinion piece:

Possibly the most dire consequences would be the effect in the region. The shared view in the region is that Iraq is principally an obsession of the U.S. The obsession of the region, however, is the Israeli-Palestinian conflict. If we were seen to be turning our backs on that bitter conflict--which the region, rightly or wrongly, perceives to be clearly within our power to resolve--in order to go after Iraq, there would be an explosion of outrage against us. We would be seen as ignoring a key interest of the Muslim world in order to satisfy what is seen to be a narrow American interest.

That might sound like a progressive critique but it was anything but. The Realist School has long held, correctly, that the resolution of the Israeli-Palestinian conflict is the number one priority of American Middle Eastern policy. It's one reason why George Herbert Walker Bush's administration was so distrusted by many Israeli hard-liners.

So, what is Obama doing? By taking advice from Scowcroft, leaving Robert Gates (for now) in charge of the Pentagon, and by bringing in other Realists on to his team, he is co-opting the centrist Republicans. The Ranking Member of the Senate Foreign Relations committee, Richard Lugar, and likeminded thinkers like Chuck Hagel, are now de facto members of the Obama coalition. They are inside the tent, pissing out. This dulls McCarthyite criticisms from the neo-conservatives and from the Israeli hard-liners as it gives the appearance (and much of the reality) of a bipartisan foreign policy consensus. But Obama did not stop there. He has disarmed the Israeli hard-liners by giving them a seat at the table, as well. Nowhere is this clearer than in his selection of vice-president and chief of staff. If he goes through with the selection of Hillary Clinton as Secretary of State, he will further disarm the hard-liners.

Now, there is a legitimate progressive critique that Obama is staffing up with a toxic combination of people that were either wrong about the invasion of Iraq or that were right, but for the wrong reasons. After all, the Realist School might have been clear-eyed on the ill-advisability of invading Iraq, but they are myopic about their own culpability in creating the problems we face in the Middle East and elsewhere in the world. What is needed is much more far-reaching change. That's true. But that change must be managed carefully, and it will come much easier if it is done with a broad coalition of support.

Barack Obama would be well-advised to find some idealistic progressives for his foreign policy team. He needs to hear their voices even if he doesn't take their advice. His strategy so far is finely honed to getting things done in the Washington/Establishment framework, but he needs allies as well as advice that runs counter to Establishment thinking. We need radical change, but we need to do it in a pragmatic way.

And as usual, he's dead right. Compared to the last eight years of incompetent, moronic, belligerent insanity that we're used to, a well-thought out and pragmatic approach to actual problem-solving in the Middle East is exactly what we need.

And Obama is in fact going out of his way to get as many people on board as he can in order to defuse and disarm the knee-jerk, reactionary opposition to it. If he's successful, then it will assure lasting change.

I just pray BooMan's right.

The Volker Gambit

Obama's plan for getting us out of this mess involves putting Paul Volker in charge of the Presidential Economic Committee On Getting Us Out Of This Mess.

President-elect Barack Obama Wednesday named former Federal Reserve chairman Paul Volcker, 81, to lead a new economic recovery board.

"Paul has been by my side throughout this campaign, providing a deep understanding of financial markets, extensive experience managing economic crises, and keen insight into the global nature of this particular crisis," Obama told reporters, calling Volcker "one of the one of the world's foremost economic policy experts."

Obama said a key purpose of the board would be to provide a perspective from outside the walls of the Washington "echo chamber," which he said "can sometimes keep out fresh voices and new ways of thinking."

The announcement came during the president-elect's third news conference in three days on the economic situation.

Austan Goolsbee, a University of Chicago economist who has been one of Obama's top economic advisors, will serve as Staff Director and Chief Economist of the board.

Obama said he would name other members of the board "in the coming weeks." He is due to take office on January 20, 2009.

The board will brief Obama, offering independent, nonpartisan information, analysis and advice to the president as he formulates and implements his plans for economic recovery, Obama's transition office said.

It will be established initially for a two-year term, after which Obama will determine whether to continue its existence based on its continued necessity.

I suppose that qualifies as a ray of hope on the economy.

Maybe.

Zandar's Thought Of The Day

If neocon con man Max "Bomb Em All" Boot is "gobsmacked" with happiness over Obama's foreign, military, and economic policy picks, then there's something seriously f'ckin wrong with "change we can believe in."

I Can Guess Where More Bailout Cash Is Going

To the FDIC, of course.

The Federal Deposit Insurance Corp. said that the list of banks it considers to be in trouble shot up by 46 percent, to 171, during the third quarter.

Total assets held by troubled institutions climbed from $78.3 billion to $115.6 billion -- a figure that suggests that the nation's top 20 banks aren't on the list, even though they also are getting slammed by the ongoing credit crisis. The FDIC does not reveal the names of institutions it deems troubled.

On average, about 13 percent of institutions on the FDIC's list end up failing.

Nine banks failed during the third quarter, decreasing the FDIC's deposit insurance fund to $34.6 billion from $45.2 billion in the second quarter.

And of course these are far worse than average times.

It's that last paragraph that bothers me the most. Nine banks failed at a cost of $10 billion. More will fail this quarter, indeed some already have.

The $34.6 billion that's left in the FDIC won't make it through spring. Billions will be fed into it. Billions more will be paid out as more and more banks fail.

But it's okay, Bloomberg says Obama's a smart guy for putting some of the same folks responsible for this mess in charge of it.

After all, that philosophy worked so very well for Bush and America over the lest 8 years. It's not like Obama ran on "change" or anything.

StupidiNews!

• More US troop deaths in Iraq this week, bringing the total to 4,206.
• 6,400 uncounted absentee ballots in Minnesota could make the difference in the Senate recount there.
• Yesterday's announced plan to buy half a trillion worth of mortgages lowered 30-year rates across the board.
• After suffering deadly wildfires earlier this month, now California faces major mudslides.
• A Florida judge has overturned that state's 30-year ban on gay adoption.