Source: The Intel HubNomi Prins
I confess; I expected to be bored out of my mind listening to
President Obama’s campaign – I mean, State of the Union – I mean
campaign, speech.
I kept hoping some truly earth shattering story would sneak in there
beforehand, like say some discovery that Mitt Romney had been having an
affair with Newt Gingrich’s ex-wife while he was creating jobs at Bain
capital, and we could all focus on that instead.
It turned out that my pre-determination proved accurate. I wonder if
the members of Congress felt the same sense of same déjà vu that I did,
as they were bopping up and down and applauding.
Obama’s speech was a compilation of highlights from his past ones.
One part optimism, two parts repetition equals one total uninspiring.
Maybe it’s so boring, because it matters so little at this point.
Taking away popularity polls, our national threshold for belief in
hope or change has been trampled, not just because of Obama or Romney,
but of the whole political apparatus that thrives on deflection of
reality and posturing.
We don’t have the same energy to expend listening to politicians, the
endless spin that renders fact obsolete, responsibility absent, and
true accomplishment, unnecessary.
We saw Optimistic Obama in his first address to Congress in 2009:
“While our economy may be weakened and our confidence shaken; though we
are living through difficult and uncertain times, tonight I want every
American to know this: We will rebuild, we will recover, and the United
States of America will emerge stronger than before.”
We got Presumptuous Obama in 2010: “As we stabilized the financial
system, we also took steps to get our economy growing again, save as
many jobs as possible, and help Americans who had become unemployed.”
We watched Philosophical Obama in 2011: “We are the first nation to
be founded for the sake of an idea -– the idea that each of us deserves
the chance to shape our own destiny. That’s why centuries of pioneers
and immigrants have risked everything to come here… The future is ours
to win.”
Now, we had Campaigning on Fairness Obama. He returned to the roots
of his pre-Presidential words, having accomplished little to attain the
goal that his words implied. Here are ten things that President Obama
skirted:
1) The cost of healthcare insurance. Obama tried to play both sides,
slapping a populist spin on an insurance industry gift. “That’s why our
health care law relies on a reformed private market, not a Government
program.” He claimed he won’t “go back” on things like health insurance
companies being able to cancel policies. He didn’t say that insurance
premiums have already risen 22% in the past two years. Republicans hate
Obama’s ‘signature’ healthcare reform bill because it unconstitutionally
forces people to purchase insurance. Democrats support the bill because
Obama passed it. The reality is – by the time it takes effect in 2014,
premium costs may have doubled. Frame it however you want, that means
health insurance could cost twice as much when this bill takes effect as
it did before it was passed. Meanwhile, there are more people without
insurance (because they can’t afford it) even though insurance companies
can’t cancel policies or deny insurance for pre-existing conditions.
This bill merely offers insurance companies a wider pool of customers,
with a few restrictions on how much they can pillage them.
2) Student Loan Defaults. Obama claimed he wants to cap interest
rates on student loans – which would be great, but can only work in this
particularly low rate environment. He urged colleges to keep costs
down – again, something that’s worked out really well when he’s
mentioned it before. This year, student loan debt surpassed credit card
debt, breaching the $1 trillion mark, at an average of more than $25,000
per student (and up 47% over a decade ago, not all under Obama, but
still a problem). Not surprisingly, student loan defaults rates have
risen alongside this debt increase. Nearly 9% of loans defaulted in 2010, of those that began repayment in 2009, vs. 7% that began in 2008.) Obama didn’t mention this growing concern.
3) Youth unemployment. Obama took credit for the creation of 3
million jobs (I’m not going to debate that here). Regardless, youth
unemployment is at its highest rate since 1948. The unemployment rate
for those under age 25 is 18.1%, (31% for blacks) having risen sharply
since 2008. Do the math. High student loan debt + diminishing job
prospects = bad ending. Work-study programs have to be intense to
really alter that.
4) Big banks. The largest firms continue to grow their asset bases
and fee extrapolation strategies from their captive customer base (If
you’re say, a JPM Chase customer, it costs you $5 to extract your own
money from a Bank of America ATM – both banks get a cut). It was Obama
that re-confirmed Fed Chairman Ben Bernanke for another fourteen years
(and yes, a bi-partisan Congress agreed), and who still keeps Treasury
Secretary, Tim Geithner around. Both men were gung-ho about the merger
mania that dotted Wall Street in the fall of 2008 and making the
‘too-big-to-fail” banks bigger, as they now are.
5) Small banks. President Obama didn’t address the smaller bank
closings occurring because the big banks got disproportionate subsides;,
389 smaller banks (with $297 billion in assets) failed from 2009 to
2011. Like during the early years of the Great Depression, this means
less choice for individuals, less loans for local businesses, and
consolidation of influence and market share for the big banks – which
comprise Obama’s largest bundling base.
6) Borrowers. Despite a few tepid programs to help homeowners, the
sheer number of foreclosures is higher today than it was in 2008. There
were a record number of foreclosure filings: 2.9 million in 2010 and 2.7 million in 2011. These are predicted to rise in 2012 amidst default surges and more lender notices than in 2011.
Why? Because Obama’s program (that was supposed to help 5 million
borrowers, and helped half a million) had to be approved by the banks.
Banks don’t like citizen aid programs, even if they screwed citizens to
begin with by fueling a $14 trillion toxic asset pyramid repackaging
risky (for people), high interest-bearing (for them). Obama said, “The
banks will repay a deficit of trust”? What?! When?! Where?!
7) Recent regulator incompetence. Regulators looked the other way,
Obama said, pre-crisis. But he mentioned nothing about regulators’ more
recent passes; the SEC bestows banks settlements for fraudulent mortgage
asset products, without extracting any admission of wrongdoing. He
missed saying anything about the lack of related DOJ criminal
indictments. The top five banks agreed to pay $1.149 billion to the SEC
to settle subprime-mortgage related fraud charges, with no admission of
guilt or criminal indictments. (The SEC settlement of $285 million with
Citigroup was rejected by Judge Rakoff in November, 2011 and is being
re-negotiated.) And Obama wants to create a Financial Crimes Unit?
What’s the SEC supposed to be doing? or the DOJ? or the FBI?
8 ) MF Global and customer money. On the same topic – the deficit of
trust thing: Obama avoided any talk about his buddy, Jon Corzine or MF
Global, the nation’s eight largest bankruptcy. He didn’t point out how
diabolical it was to use and ‘lose’ customer funds that were supposed to
have been kept separate from bad bets. He didn’t suggest having a solid
separation between customer money and financial firm money – as in –
don’t have it at the same firm. He claimed, “we will not bail you out
again” and yet, we still are.
9) Banks hoarding. Obama neglected to mention the $1.6 trillion that
banks are stashing at the Fed in the form of excess (and
interest-bearing) reserves, which do nothing for the Main Street
economy. Meanwhile, small business loans are at a 12-year low, having shrunk continuously since 2008.
10) Obama conveyed that we dodged a bullet by getting the banking
system under control. He didn’t note the rising risk in the banking
system: the largest four US banks (JPM Chase, Citibank, Bank of America
and Goldman Sachs) control nearly 95% of the US derivatives market,
which has grown by 20% since just last year, to $235 trillion. JPM
Chase holds 11% of the world’s derivative exposure, Citibank, Bank of
America, and Goldman comprise about 7% each. Goldman has 537 times as many (from 440 times last year) derivatives as assets and it’s still considered a bank holding company (as per Bernanke) that gets federal backing.
In all, the President’s speech was reminiscent of George Clooney’s in Ides of March.
We’ve heard it all before, maybe with slightly different words: America
lost 4 million jobs before I got here, and another 4 million before our
policies went into effect, but in the last 12 months, we added 3
million job. We must reduce tax loopholes, and provide tax incentives to
businesses that hire in America. We must reform taxes for the wealthy
(though he signed an extension of Bush’s tax cuts.) We must train people
for an apparent abundance of expert jobs. We need more clean energy
initiatives. We created regulations (big sigh of relief he didn’t use
the word ‘sweeping’) to stop fraudulent financial practices. We will
help homeowners. Wall Street must make up a “trust deficit.” Like Jamie
Dimon cares.
In other words, Obama gave Wall Street a pass, while waxing populist.
Don’t get me wrong. I expected nothing different. I will continue to
expect nothing different, when he gets a second term, given the lame duo
the GOP favors his key contenders to be.
