essaysfromtheedge

The Capital Deficit

This today from The Washing Post:

Anger Over Firm Depletes Obama's Political Capital

...the bonus issue, in particular, is hounding Obama as he pursues his larger goals, in part because of the president's own repeated declarations of outrage -- offered again yesterday -- aimed especially at the firms that are feeding at the public trough.

In a nutshell, here's what's happening: AIG received about $165B in public bailout money. They were contractually obligated to pay bonuses to executives in divisions of the company that had turned a profit (not the failed divisions, as is being implied). This money amounts to around $150M. This contractual obligation originated before the bailout and could not be abrogated.

Do the math on this one, folks. What percent of $165B is $150M? How about less then 0.1%.

Two things:

1. It is being widely suppressed that the real culprit in this financial mess is the government itself, which forced banks to lend money for homes to people who could not repay those loans. Thus the defaults that started the economic avalanche. Frank, Dodd, Obama, et al want desperately for Americans to pin the blame on corporate greed. Thus this phony-baloney, trumped-up public display of righteous indignation over contracted bonuses. A wealth-envious public is only too willing to parrot these talking points.

2. By continuing to hector the private sector as the villains, this government is wasting what political leverage it has for future policy efforts on chasing rabbits; it's no different than Obama setting up Limbaugh as the straw man of the "evil right". It's sophomoric and it depletes the political bank.

Obama is treading on very dangerous ground, and the telling thing is: his arrogance blinds him from seeing it.

That is this: all Obama has is "political capital." He has no experience capital, no foreign policy capital, no economic capital. No capital in intelligence (eg, CIA, Homeland, etc.), military, administration, negotiation, policy development and implementation, legislation, commodities, energy,...

The list is endless.

Those who voted for him with the sole intent of "sending a message" to the GOP are now regretting their decision... his fringe supporters are starting to see inside the empty suit and are asking questions....

It's only a matter of time before his ardent base starts to question his "leadership." By then he will have no political capital left.

Nothing with which to stem the critical tide... then the meltdown will begin in earnest.

Dangerous days are ahead. A cornered dog is a vicious dog.



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posted by Tomás @ 3/17/2009 10:03:00 AM