By TIMOTHY EGAN If I were one of the big corporate donors who bankrolled the Republican tide that carried into office more than 50 new Republicans in the House, I would be wary of what you just bought. For no matter your view of President Obama, he effectively saved capitalism. And for that, he paid a terrible political price. Suppose you had $100,000 to invest on the day Barack Obama was inaugurated. Why bet on a liberal Democrat? Here’s why: the presidency of George W. Bush produced the worst stock market decline of any president in history. The net worth of American households collapsed as Bush slipped away. And if you needed a loan to buy a house or stay in business, private sector borrowing was dead when he handed over power. As of election day, Nov. 2, 2010, your $100,000 was worth about $177,000 if invested strictly in the NASDAQ average for the entirety of the Obama administration, and $148,000 if bet on the Standard & Poors 500 major companies. This works out to returns of 77 percent and 48 percent. But markets, though forward-looking, are not considered accurate measurements of the economy, and the Great Recession skewed the Bush numbers. O.K. How about looking at the big financial institutions that keep the motors of capitalism running — banks and auto companies? The banking system was resuscitated by $700 billion in bailouts started by Bush (a fact unknown by a majority of Americans), and finished by Obama, with help from the Federal Reserve. It worked. The government is expected to break even on a risky bet to stabilize the global free market system. Had Obama followed the populist instincts of many in his party, the underpinnings of big capitalism could have collapsed. He did this without nationalizing banks, as other Democrats had urged. Saving the American auto industry, which has been a huge drag on Obama’s political capital, is a monumental achievement that few appreciate, unless you live in Michigan. After getting their taxpayer lifeline from Obama, both General Motors and Chrysler are now making money by making cars. New plants are even scheduled to open. More than 1 million jobs would have disappeared had the domestic auto sector been liquidated. “An apology is due Barack Obama,” wrote The Economist, which had opposed the $86 billion auto bailout. As for Government Motors: after emerging from bankruptcy, it will go public with a new stock offering in just a few weeks, and the United States government, with its 60 percent share of common stock, stands to make a profit. Yes, an industry was saved, and the government will probably make money on the deal — one of Obama’s signature economic successes. Interest rates are at record lows. Corporate profits are lighting up boardrooms; it is one of the best years for earnings in a decade. All of the above is good for capitalism, and should end any serious-minded discussion about Obama the socialist. But more than anything, the fact that the president took on the structural flaws of a broken free enterprise system instead of focusing on things that the average voter could understand explains why his party was routed on Tuesday. Obama got on the wrong side of voter anxiety in a decade of diminished fortunes. “We have done things that people don’t even know about,” Obama told Jon Stewart. Certainly. The three signature accomplishments of his first two years — a health care law that will make life easier for millions of people, financial reform that attempts to level the playing field with Wall Street, and the $814 billion stimulus package — have all been recast as big government blunders, rejected by the emerging majority. But each of them, in its way, should strengthen the system. The health law will hold costs down, while giving millions the chance at getting care, according to the nonpartisan Congressional Budget Office. Financial reform seeks to prevent the kind of meltdown that caused the global economic collapse. And the stimulus, though it drastically raised the deficit, saved about 3 million jobs, again according to the CBO. It also gave a majority of taxpayers a one-time cut — even if 90 percent of Americans don’t know that, either. Of course, nobody gets credit for preventing a plane crash. “It could have been much worse!” is not a rallying cry. And, more telling, despite a meager uptick in job growth this year, the unemployment rate rose from 7.6 percent in the month Obama took office to 9.6 today. Billions of profits, windfalls in the stock market, a stable banking system — but no jobs. Of course, the big money interests who benefited from Obama’s initiatives have shown no appreciation. Obama, as a senator, voted against the initial bailout of AIG, the reckless insurance giant. As president, he extended them treasury loans at a time when economists said he must — or risk further meltdown. Their response was to give themselves $165 million in executive bonuses, and funnel money to Republicans this year. Money flows one way, to power, now held by the party that promises tax cuts and deregulation — which should please big business even more. President Franklin Roosevelt also saved capitalism, in part by a bank “holiday” in 1933, at a time when the free enterprise system had failed. Unlike Obama, he was rewarded with midterm gains for his own party because a majority liked where he was taking the country. The bank holiday was incidental to a larger public works campaign. Obama can recast himself as the consumer’s best friend, and welcome the animus of Wall Street. He should hector the companies sitting on piles of cash but not hiring new workers. For those who do hire, and create new jobs, he can offer tax incentives. He should finger the financial giants for refusing to clean up their own mess in the foreclosure crisis. He should point to the long overdue protections for credit card holders that came with reform. And he should veto, veto, veto any bill that attempts to roll back some of the basic protections for people against the institutions that have so much control over their lives – insurance companies, Wall Street and big oil. They will whine a fierce storm, the manipulators of great wealth. A war on business, they will claim. Not even close. Obama saved them, and the biggest cost was to him.
Garbage.
jcole21 Wrote: ------------------------------------------------------- > Garbage. What an eloquent rebuttal. Can you please point out what facts in this article are untrue?
I agree, I only had to read the first several lines to know the article is garbage. Written by some poor sap pissed his party lost the house, almost the senate, and his dear leader is now neutered. Bush didn’t “produce” the worst stock market decline since the depression. Replace Bush with Obama in the same time period, and the collapse would have came regardless. And 2003-2007 looks very much like a big bull market to me.
“President Franklin Roosevelt also saved capitalism, in part by a bank “holiday” in 1933, at a time when the free enterprise system had failed. Unlike Obama, he was rewarded with midterm gains for his own party because a majority liked where he was taking the country. The bank holiday was incidental to a larger public works campaign.” The US suffered another recession in 1937, despite FDR’s New Deal policies, and New Deal opponents (both Republican and Democrat) took control of Congress in the 1938 midterm election. By temporarily taking over some banks in 1933, FDR did help save the banking system, but WW2 ultimately saved capitalism.
So I presume you are against the bailouts for banks and GM even though both have saved millions of jobs and stabilized the economy, stimulus - one third of which was tax cuts and the healthcare bill? What alternatives do you propose?
how exactly did he save “capitalism”? i didn’t know one could save an socio-economic theory. this part’s great -> “As for Government Motors: after emerging from bankruptcy, it will go public with a new stock offering in just a few weeks, and the United States government, with its 60 percent share of common stock, stands to make a profit. Yes, an industry was saved, and the government will probably make money on the deal — one of Obama’s signature economic successes." so GM is now an “industry”? ford, toyota, mercedes, bmw, vw, hyndai, etc. didn’t take bailouts. i guess obama saved them all and we were asleep while it happened. also, industry analysts are still pegging GM’s price as too high and ford and the value pick (note: F jumped about 10% over the last couple of days on the GM ipo pricing…)
savings millions of jobs and the healthcare bill are sheer opposites. Just Looking at the hundreds of millions (even billions) of extra costs companies need to shell out for healthcare, you can bet they’re not going to hire a lot more people good work Obama.
Well, some of this article is true, and some of it is sketchy. Obama did give the automakers TARP money, but TARP was created by the Bush administration. “Cash for Clunkers” was a big waste of money. Obama’s administration did administer TARP, but allowed consumer credit regulations that will cost banks billions of dollars. Obama also had nothing to do with the low interest rates, which are controlled by the Federal Reserve. So like most articles, this is not completely true or untrue
Yes, I’m sure the 20% of Americans out of work feel like things have stabalized. Obama is nothing more than a professional community organizer with a penchant for socialism. His policies have been rejected by the American people, therefore, he is now just an impotent empty suit spending $200M a day to vacation overseas.
Also, it’s sort of weird that an article about Obama’s effect on capitalism does not mention his tax policies, like the unrealized capital gains tax.
“For no matter your view of President Obama, he effectively saved capitalism.” Wow, I just got ill. Can’t even read the rest. - Furthered the fraudulent bank bailouts started by Bush - Appointed a cabinet of Wall St. cronies to fleece the American public (Geithner, Summers, the Rubins, etc.) - Healthcare bill and it’s negative effect on job growth - No jobs creation - Violated the law by screwing Chrysler bond holders (anti-capitalism) - Had some part in failing to effectively regulate derivatives, the banking system, etc. - Wasted taxpayer money bailing out irresponsible home buyers (thanks for screwing people who didn’t make bad decisions and who lived within their means, you jacka$$). - Etc. He didn’t save anything. He is a disaster.
Fine. Vote for Sarah Palin next time…she looks all set to run. She will probably get elected as well, seeing the number of ignorant voters in our country. BTW What is your solution? More tax cuts? Another war - oh lets pick Iran this time? Also how is this President supposed to create jobs? If companies are hiring overseas instead of in the US, what can he possibly do except heavily devaluing the dollar?
"Of course, nobody gets credit for preventing a plane crash. “It could have been much worse!” is not a rallying cry. " This. Also where were the guys who want “lower govt spending and balanced budget” during the Bush administration?
The banking system was resuscitated by $700 > billion in bailouts started by Bush (a fact > unknown by a majority of Americans), and finished > by Obama, with help from the Federal Reserve. It > worked. The government is expected to break even > on a risky bet to stabilize the global free market > system. Had Obama followed the populist instincts > of many in his party, the underpinnings of big > capitalism could have collapsed. He did this > without nationalizing banks, as other Democrats > had urged. We all know that bank bailouts were a necessary evil. Remember it was the government that pushed this home ownership debacle. Let’s have Fannie and Freddie buy up mortgages so this can free up bank capital so they can make more loans. If the government had just let the free market work, we would not have had the housing market bubble and the subsequent bank bailouts. > Saving the American auto industry, which has been > a huge drag on Obama’s political capital, is a > monumental achievement that few appreciate, unless > you live in Michigan. After getting their taxpayer > lifeline from Obama, both General Motors and > Chrysler are now making money by making cars. New > plants are even scheduled to open. More than 1 > million jobs would have disappeared had the > domestic auto sector been liquidated. > So this is what capitalism is? Propping up a failing industry that produces crappy cars that nobody wants to buy. Capitalism says let them fail and let’s retrain the workers who lose their jobs to go into industries where we do have a comparative advantage (this is where the government can actually play a role by helping these workers retrain). Capitalism is not bailing out auto companies. > Interest rates are at record lows. Has nothing to do with Obama. Fed sets interest rates. > The health law will hold costs down, Every sane person that has looked at this bill has stated that costs are going up not down.
marcus phoenix Wrote: ------------------------------------------------------- > Fine. Vote for Sarah Palin next time…she looks > all set to run. She will probably get elected as > well, seeing the number of ignorant voters in our > country. > > > BTW What is your solution? More tax cuts? Another > war - oh lets pick Iran this time? > > Also how is this President supposed to create > jobs? If companies are hiring overseas instead of > in the US, what can he possibly do except heavily > devaluing the dollar? Agreed with a poster above. What utter garbage. Used a few facts out of context and made sweeping assumptions. I see this kind of stuff posted on HuffPo and others all the time. Its really sad actually because its just a giant circle jerk of the same ignorant stuff recycled. I sometimes feel like I’m looking at the polar opposite to the tea party. Seriously man, stop letting your ideology get ahead of your better judgement. I think you should listen Stewart’s speech, which to much of my surprise (the way I took it) was for us to be more objective about things, to stop making sweeping claims, etc… With comments such as, starting another war with Iran, I can see you are struggling in the objective department. I seriously doubt anyone with some brains sees that as a possible driver for economic growth.
Obama = Fail. Voters are speaking with their actions by using their votes 1 word: economy.
Dude, you don’t get it. Government can never create jobs. The money the government uses to fund a government job opening comes from the people. 1. Nothing in our material world can come from nowhere or go nowhere, nor can it be free: everything in our economic life has a source, a destination, and a cost that must be paid.
I think Obama can make a legitimate argument that things would be worse now if he hadn’t done three things: 1) Relax bank accounting rules (so they look more healthy, leading to a recovery in confidence) 2) Stress tests & providing capital to weak banks (by boosting confidence) 3) Auto bailouts That doesn’t necessarily mean I think they were the right things in the long-term interest of the economy, but in the short-run those are the three main things that I think resulted in that 50% recovery in asset prices (ignoring the fact that the proper time to start counting would be November 2nd rather than January whatever) that Obama could be considered responsible for. I don’t think he has any room to claim that healthcare reform or any other regulation he adopted were responsible for this rise in asset prices. Further, on those issues he did not really fix any problems.
iteracom Wrote: ------------------------------------------------------- > Obama = Fail. Voters are speaking with their > actions by using their votes > > 1 word: economy. So what are your solutions? More tax cuts? What spending would you like to cut when the two biggest elephants in the room are entitlements and defense? If you cut spending will that not further weaken the economy? If you extend the Bush tax cuts for everyone that will add 4 trillion dollars to the deficit, will that put us deeper in the hole?