Insane vs Sane

Reeves NYT, on Starting the job: Hail to the Chief — in Public, That Is

President Obama must have been a bit surprised when, on his 54th day in office, the former vice president, Richard Cheney, decided to go on television and brand him a danger to the Republic. “ “He is,” said Cheney, “making some choices that, in my mind, will, in fact, raise the risk to the American people of another attack.”

That is not the way the game is usually played. Even former President George W. Bush understood that. Speaking two days after Cheney to an audience of 2,000 people in Calgary, Canada, he was, predictably, asked about Cheney’s remarks and said of his successor:

“He deserves my silence. I love my country a lot more than I love politics. I think it is essential that he be helped in office.”

That’s better — or at least validates the norm of history.

On President Kennedy’s 86th day in office, April 16,1961, a United States-backed and trained brigade of exiles tried to overthrow Premier Fidel Castro of Cuba by invasion at a place called the Bay of Pigs. It was, of course, a total disaster, one of the great embarrassments in American history. The 35th president deflected some criticism by publicly taking responsibility for the incompetence and stupidity of that adventure. But he also immediately began a series of “national unity” meetings, beginning with former Vice President Richard Nixon, his 1960 opponent, and former President Dwight Eisenhower,

(Associated Press) President John F. Kennedy, left, met with former President Dwight D. Eisenhower at Camp David in Thurmond, Md., to discuss the Bay of Pigs invasion.

revered by much of the country for his military leadership during World War II.

Nixon was first, coming to the White House on April 20. “It was the worst experience of my life,” Kennedy told his old adversary. Then he asked what Nixon would do now. The answer was: “I would find a proper legal cover and then I would go in.”

The president said no to that; he was afraid the Soviet Union would retaliate where the western Allies were weakest, in Berlin. Nixon nodded, then said that whatever Kennedy decided, “I will support you to the hilt.”

Two days later, he invited Eisenhower for lunch at Camp David. Kennedy had never seen the presidential retreat, which Eisenhower had named for his grandson. They walked the paths of the 125-acre reservation and the old five-star general gave the young ex-Navy lieutenant the tongue-lashing of his life. The conversation, reconstructed from Eisenhower’s notes from the meeting, went something like this:

“No one knows how tough this job is until he’s been in it a few months,” Kennedy began.

“Mr. President,” answered Eisenhower,” If you will forgive me, I think I mentioned that to you three months ago.”

“I certainly have learned a lot since then.”

“Mr. President, before you approved this plan, did you have everybody in front of you debating the thing so you got the pros and cons yourself and then made the decision, or did you see these people one at a time?”

“Well, I did have a meeting … I just took their advice.”

“Mr. President, were there any changes in the plan that the Joint Chiefs of Staff had approved?”

“Yes, there were. We did want to call off one bombing sally.”

“Why was that called off? Why did they change plans after the ships were at sea?”

“Well, we felt it necessary that we keep our hand concealed in this affair …”

“Mr. President, how could you expect the world to believe that we had nothing to do with it? Where did those people get the ships to go from Central America to Cuba? Where did they get the weapons? Where did they get all the communications and all the other things they would need? How could you have possibly kept from the world any knowledge that the United States was involved? I believe there is only one thing to do when you get into this kind of thing — it must be a success.”

“I assure you that, hereafter, if we get into anything like this, it is going to be a success.”

“Well, I’m glad to hear that,” said Eisenhower.

It was time to meet the press. Reporters were lined up along the electric fence around the reservation. Kennedy began by saying: “I asked President Eisenhower here to bring him up to date on recent events and get the benefit of his thoughts and experience.”

Despite the criticism he delivered in private, Eisenhower said, “I am all in favor of the United States supporting the man who has to carry the responsibility for our foreign affairs.”

Kennedy helicoptered back to the White House, angrily stalking the Oval Office, cursing his military leaders and the Central Intelligence Agency, ending his tirade with: “How could I have been so stupid?”

He called in the chief architects of the Bay of Pigs invasion plan, the C.I.A. director Allen Dulles, and Richard Bissell, who planned the operation. He told Bissell: “In a Parliamentary system I would resign. In our system the president can’t and doesn’t. You and Allen must go.”

And so, Kennedy began the last eight of his first 100 days in the White House.

Sully: Obama, Non-Lefty

A very sane piece from Andrew Leonard. He sees the central conservative wisdom behind the Geithner plan: if it doesn't work in getting credit moving, we will indeed have little choice but receivership and all the headaches and unintended consequences of that endeavor. To get the economy moving again without that exigency is surely worth a shot - and a sign that Obama is a pragmatic liberal before he is an ideological one. You saw that in his caution on healthcare in the campaign, never quite biting off the full Clinton option. But since he took office, you have also seen, even in the haphazard attempt to figure out the eocnomic crisis, a methodical coolness that is the essence of pragmatism:

Geithner's plan may well not work, and it may be too beholden to Wall Street, but its rollout has not been an exercise in helter-skelter chaos. In dealing with the economic crisis as a whole, the Obama administration has put into play a steady flow of initiatives that should, in theory, all work together. In addition to the stimulus, the housing plan and credit relief for small businesses, there's also been a budget proposal addressing long-term issues that even Paul Krugman found impossible not to praise. The Fed has been doing its part by engaging in its own extraordinarily broad-scale stimulative monetary policy...

All along, it has been universally agreed that the most glaring weakness of the Obama portfolio has been the lack of detail on how Geithner intended to tackle the banking system. But there is a difference between a lack of detail and utterly contradictory confusion. If we can hold our breath long enough to calmly assess the last two months, one can see that amid all the noise, the Obama administration has been moving carefully forward in one direction.

We'll see, won't we? I stick by my basic assessment of Obama's progress here.

Yglesias on Kinds of Confidence

Ana Marie Cox Twitters:

Geithner on new toxic assets funds: “They’re managed by professionals who know how to do this for a living.” Uhm.

I think this highlights a really problem for the administration. They want to maintain and restore confidence. But we’re now looking at a bifurcation of attitudes. Wall Street and other big business insiders take a different view of what sort of steps inspire confidence than do most people. To most people, as per Cox’s Tweet, the Wall Street whiz kids are, themselves, jokes and what would restore confidence is some kind of sense that they’ve had their assess kicked and some new people are brought in the run the show. But to the insiders, it’s just the reverse—they want themselves and their pals to continue to control the commanding heights of the economy.

Ideally, you’d want to play to both audiences simultaneously, but I don’t really see any way to do that. Consequently, the administration has pretty consistently chosen to play to the audience of insiders. And they’ve done it pretty well. You can see that stocks are up on this announcements, just as they were on Geithner’s nomination, and on most other days on which significant anti-crisis measures were announced. But on another level, Wall Street doesn’t manufacture cash out of thin air. The financial system depends on a broader set of non-financiers being willing to trust their earnings to financial institutions. And whether or not this plan shores up large banks’ balance sheets, nothing that keeps all the incumbents in place is going to do anything to reassure people about doing forward-looking business with these institutions.

hilzoy says they are Shameful

Via TPM, a Wall Street Journal article that says, basically, that at first the Obama administration did not particularly seek out Wall Street's advice:

"In late January, as Treasury Secretary Geithner prepared his proposal for handling the banking crisis, administration officials avoiding seeking input from Wall Street. "Those people are tainted," said one aide at the time. "Why would we consult the very executives who got us into this mess?" (...)

The administration's initial approach contrasted with those of the last two White Houses. Robert Rubin left Goldman Sachs Group to become one of Bill Clinton's top economic advisers, and convinced the new president that what was good for Wall Street was good for America. Under President George W. Bush, the administration "looked up to and admired Wall Street," says one banker. "The Obama folks don't even like us.""

But then Obama decided that it was important to reach out more to Wall Street, and did. More Wall Street people were consulted; the administration worked harder to win them over.

Here are the passages from the article that really got to me. (Emphases added.) First:

"Meanwhile, Treasury Secretary Timothy Geithner and his colleagues worked the phones to try to line up support on Wall Street for the plan announced Monday. (...) Some bankers say they turned the conversations into complaints about the antibonus crusade consuming Capitol Hill. Some have begun "slow-walking" the information previously sought by Treasury for stress-testing financial institutions, three bankers say, and considered seeking capital from hedge funds and private-equity funds so they could return federal bailout money, thereby escaping federal restrictions."

Second:

"But as the furor intensified, Mr. Obama's words to Congress -- "we cannot govern out of anger" -- seemed to take on less importance. Last week, he was asked by reporters on the White House South Lawn whether anger was getting in the way of pushing through banking reforms. "I don't want to quell anger," he replied. "I think people are right to be angry. I'm angry."

Bankers were shell-shocked, especially when Congress moved to heavily tax bonuses. When administration officials began calling them to talk about the next phase of the bailout, the bankers turned the tables. They used the calls to lobby against the antibonus legislation, Wall Street executives say. Several big firms called Treasury and White House officials to urge a more reasonable approach, both sides say. The banks' message: If you want our help to get credit flowing again to consumers and businesses, stop the rush to penalize our bonuses."

I think it's important to be really, really clear about what this article claims. Both the stress tests and the attempts to get credit flowing again are essential parts of our attempt to solve the enormous economic problems we now face, problems that these very firms are largely responsible for. If the banks are "slow-walking" the stress tests and threatening not to help get credit flowing, that just is threatening not to help get the country out of the economic crisis.

That would be an absolutely appalling thing to do under any circumstances. It would be doubly appalling since these very people bear a lot of responsibility for that crisis. But the fact that they are making these threats not over some large issue of principle, but over their bonuses -- that's just breathtaking.

I'm with Ezra:

"Not to sound naive about this, but the absence of patriotism that galls. The lack of responsibility is sickening. These bankers delivered an almost mortal wound to the American economy. Their actions threw millions out of work and wrecked the retirement savings of tens of millions more. It is no exaggeration to say that they will cost us more than 9/11. (...)

That we even need a new raft of compensation regulations strains the boundaries of credulity. It makes you question the values of your countrymen. They were the principle beneficiaries of a decade-long bubble that they inflated. These Ivy League bundles of privilege were given every possible advantage and then took yet more than that. They took the advantages of high school seniors applying to college this year or entering the workforce next year. They took the advantages of seniors who had saved for retirement and parents who had invested to build their own business. And now they're refusing to help defuse the bomb at the center of our economy unless we pay them retention bonuses. Worse, they're threatening to flee the scene of the crime and make money off the carnage. That, it's been argued, is why we need to keep paying meeting their demands: Because we need them working for us rather than against us. It's chutzpah as the Yiddish define it: A child who kills his parents and then begs for lenience because he's a pitiable orphan. It's shameful."

Exactly.

Yglesias on Breaking up the Big Banks

My biggest concern about the PPIP approach to the banking system is that even if it works, what it does essentially is return us to the pre-crisis status quo—banks that are so large that they’re too politically powerful to regulate effective and too systemically important to be allowed to fail. That’s a recipe for dishonest transactions that produce short-term profits at the cost of blowups. One appealing element of nationalization is that it can easily be made to end in a world in which there is no institution named “Bank of America” or “Citi” and no such gigantic institution. That said, the PPIP approach doesn’t preclude taking a hammer to the institutions. And as Simon Johnson says something has to be done:

In any case, our top political leadership needs to really sell some version of the following message. We let the banks get out of control and the cost will be enormous; our debt/GDP ratio will in all likelihood rise from around 40% to over 80%. We cannot afford to have the same problem again. We must break the power of banks before they break us all. And if you don’t think banks can do that much damage to economies, just look around outside the United States - the world is full of countries where growth is slowed or distorted by a financial system that becomes too powerful. This is not about tweaking the existing U.S. regulatory system; it is about complete change and - in many senses - turning back the clock to a financial system that was simpler, smaller, and much less dangerous.

Unfortunately, I thus far see relatively little indication that the administration is thinking along these lines. Instead, they seem to me to be inclined to remain living in a world populated with banks that are “too big to fail” and “too complicated to nationalize” but try to somehow regulate them better. This is, I think, a strategy doomed to failure over the long run.

Chris in Paris: "Science first and leave politics at the door"

Putting aside my disgust for the terrible economic policies, yes, elections do matter. The EPA move is a great example and now this. More than ever, this is precisely why we need Obama to get the economic team sorted out or else we can turn back the clock again. None of us want this which is why we all want and need Obama to succeed.

A federal court today ordered the Food and Drug Administration to reconsider the agency's controversial decision limiting non-prescription access to the morning-after pill Plan B to women age 18 and older.

U.S. District Judge Edward R. Korman ordered the FDA to make Plan B available to women age 17 and older within 30 days and to reconsider whether to make the drug available to women of all ages without a prescription.

In his 52-page decision, Korman said the "record is clear that the FDA's course of conduct regarding Plan B departed in significant ways from the agency's normal procedures regarding similar applications to switch a drug from prescription to non-prescription use."

Critics of the FDA's position hailed the ruling.

"We're very excited," said Suzanne Novak, a senior staff attorney for the Center for Reproductive Rights, which filed a lawsuit against the agency to reverse the 2005 decision.

"The message is clear: The FDA has to put science first and leave politics at the door. We are encouraged that the FDA under new leadership, when they look at the evidence, will remove the unique barriers that have been in place and it will finally be available to all women without any barriers," Novak said.