The Tragedy of the Obama Administration
By Barry Ritholtz at The Big Picture
On election night six years ago, I wrote The Tragedy of the Bush Administration. In it, I despaired that:
“Once in a generation, the stars align for a political leader. There is this perfect moment – too often based on some enormous danger of long-lasting consequences for generations to come.
Once every half century, the perfect combination of leadership and threat, of challenge and response meet. The leader – imperfect, fallible, yet ready to rise to the occasion – grabs the brass ring.
Think Winston Churchill fighting the global threat of the Nazis, Thomas Jefferson writing the Declaration of Independence, JFK’s dare to send a man to the Moon . . .”
The rest of that piece went on to lament how George W. Bush was granted that rare opportunity to grab the brass ring, to rise to the occasion — and failed miserably.
Here we sit, not half a century later as originally surmised, but a mere six years later. I once again find myself lamenting the opportunities wasted by a US President in response to a great cataclysm. In the case of President Obama, it was his response to the financial crisis. The opportunity for greatness presented itself, and was . . . ignored.
The President was swept into office on a wave of Anti-Bush sentiment. The stock market was in freefall, credit was frozen, the recession already 13 months old. As Rahm Emanuel said, “Never waste a good crisis.” A strong leader would have taken advantage of the moment, of the opportunity.
And what an opportunity it was: Over the prior 3 decades, the economy of the United States had been “financialized.” We became much more involved in ‘financial engineering’ than any other more productive engineering. Along with this financialization came increased revenue for the biggest banks and investment houses; greater profits, influence, and power. A wave of deregulation swept over the sector, freeing the banks from meddling oversight.
Thus, as the finance sector got larger and more important, it was paradoxically under ever less scrutiny, supervision, and regulation. With that new found freedom from oversight, the banks promptly blew themselves, and the global economy, to smithereens.
This was the environment in which the President came into office. What did he do in this scenario?
• He appointed two of the architects of the crisis to major White House economic positions: Lawrence Summers as CEA Chair, and Timothy Geithner as Treasury Secretary.
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