Guest Post: Obama's Speech, His Banks, Our Jobs
Submitted by Nomi Prins
Obama's Speech, His Banks, Our Jobs
Before tomorrow's 2012 pre-election speech in which President Obama's vocal elocution will be earnest, and results - to put it mildly - tepid, about about how he could create jobs dammit, if only the Republicans would behave, it's interesting to note who's supporting Obama keep his job.
A cursory look at the early stages of his campaign fundraising reveals that the same group of people that benefitted from policies (bi-partisan) that lavished them with cheap money, secret loans, debt guarantees and other forms of perks not available to the average citizen, are backing him for President. Big Time.
And whereas it's true, Obama's most recent poll numbers look as abysmal as any President (save FDR who he will never, ever be) facing a depressed economy and a near double-digit 'official' unemployment rate (worse if you get beneath its massaged surface), this isn't effecting his most important support, the financial kind. To date, Obama's Presidential bid dosh comes largely from - wait for it - the financial sector.
Yes, the same sector that screwed the country over, and that, despite some unpleasant lawsuits they will likely settle, remains as powerful, unrepentant, unaccountable, selfish and Main-Street-destabilizing as before Obama took office. No wonder he's been able to keep Treasury Secretary, Tim Geithner by his side - someone has to allay Wall Street concerns that true retribution or meaningful regulatory repercussion will befall them.
So far, Obama has raised $49 million dollars. (More than all the GOP wannabes combined, but that's largely because he's got the head-start and incumbent factor going for him. Plus, he's a hit at fundraising events. Here in Los Angeles, he's tied up traffic several times with those already.) Nearly $35 million has come from 'bundlers', those wealthy, connected, folks that circumvent the caps on their individual donations by pooling their dough together. And just over a third of that, or $11.8 million, comes from the Finance Sector (and yes, one of the sector's 44 bundlers is from Goldman Sachs, his number two contributer in the 2008 election).
Now, it's not shocking that the banks are banking on Obama. Until they see a surer bet on the Republican side emerge, they're not going to be diffusive with their capital that way. And, beyond some scolding words a couple years ago around election time, followed by a Wall Street speech to which none of the CEOs showed, Obama has done zero to expose, denounce, or change the specific fraudulent actions of his supporters - that would be - political suicide for him. Plus, in the game of politics today, the issue for both parties is slamming each other, Wall Street ire has been replaced with entitlement spending cut banter, whether this results in meaningful policy is not even an afterthought.
Meanwhile, Obama will release details of a new $300 billion jobs stimulus program and urge the GOP to allow him to do his job by creating the nation's jobs. He might even throw in a sentence or two about helping downtrodden borrowers refinance, which will require bank approval and facilitation, which therefore will be as successful as HAMP. And the GOP will balk and say we must cut spending not increase it, refusing to acknowledge the extent of debt we created to float a criminal banking system.
Stalemate to the nth degree. Big yawns all around.
What Obama will not discuss, is the private lending problem that caps the ability of individuals to stay afloat and small and mid-size businesses to hire. Though they have been treated with kids gloves and deep pockets by Washington, the big banks have not shared the joy they received. Small business loans remain anemically at late 2008 levels inhibiting hiring or expansion - and these are the companies that don't offshore in a heartbeat. Refinancing and mortgage restructuring, despite record low interest rates making the transaction sensible and reducing risk all around, are negligible, thus home movement is impossible and consumer confidence and construction jobs are hit in the process as well. Personal and business bankruptcies continue to mount absent opportunity. This isn't a healthy scenario for job growth.
You can blame it on 'the economy', 'tough times' 'all of us struggling together' or any other generic poli-sound bites. Or you can blame it on the biggest banks sitting on extra capital, which either a) is stored at the Fed in the form of $1.6 trillion worth of Treasury bonds that receive interest in excess of the cost of borrowing the money to purchase them, b) is used to trade and speculate, or otherwise derive ways to make a 'quick' buck, or c) is set aside to deal with lawsuits they brought upon themselves. Again, none of this is nationally productive or job inducing.
The private banking system is holding people's homes, potential jobs, and general confidence and economic well-being hostage. Thus, however Obama phrases whatever he says tomorrow, and even if his plan for a job stimulus package is verbalized in a more coherent strategy than last time - without a loosening of credit - new or re-negotiated or otherwise more befitting the low rate environment that the Fed offers banks, it's just one tiny piece of a giant puzzle that won't be able to do squat to turn the tide.
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