I'll limit my comments to the author's criticisms of Obama's handling of the financial crisis, since we've already discussed and have general consensus on Obama's transgressions on civil rights, gov't transparency, and the war on terror. I somewhat agree with the facts that the author has presented, but I disagree that not voting for Obama in 2012 in favor of a 3rd party candidate is the best thing we can do. Because clearly the right is not defecting to support the libertarian candidate - they are holding their nose and voting Romney.
I know I've spent all year jocking Obama's record and declaring him the obvious choice vs. Romney. 2008 seems like a long time ago, but it is worth revisiting now. J has studied the financial crisis in great detail, so I'd be happy for him to chime in here if he has time. Please forgive my inaccuracies and simplifications. :)
A lot of Obama's background suggests that he's not a pure corporatist, and I believe he prioritizes social justice and middle class issues as well or better than most recent presidents. Of course he took a lot of Wall St. money in his 2008 campaign, but actually many elite donors have defected since then, because he hasn't show them enough "love". I think the system was mostly to blame. Since the S&L scandal, banks have used soft power to gain more influence in Washington. Especially after the Glass-Steagall repeal and Cit. United, it's clear that some Congressional committees, the SEC, the Fed, Treasury, and others are literally controlled by Wall St. Even if you or I were president and we were completely anti-banks, what could we do?
As the new president in 2008, Obama's priority was to prevent the nation from falling into a decade-long depression. And he did that (we think). Unfortunately the banks have rigged the game so that saving them was a prerequisite for saving the economy. And of course they are more clever than our leaders (or Washington was complicit in their plans), so they were able to dump all the debt, risk, and toxic assets on us, while the banks (some would argue) got even more freedom to grow bigger and profit from the aftermath of the financial crisis. As the author said, it basically cost them zero to borrow unlimited money. That money was supposed to be used to kick-start growth and rescue underwater mortgages, but they used it to make themselves richer and bigger instead. Probably the largest wealth transfer in human history since Midas. Unfortunately no law could have passed Congress that would have forced the banks to use the bailout funds properly, given our money-tainted legislative process. Especially since the process started before Obama's term. Paulson gave Congress that famous 2-page bill and told them to write Wall St. a blank check. Pelosi and others protested, but ultimately had to cave because no one wanted to be responsible for dithering while the economy imploded. Congress was not equipped to handle such a rapidly deteriorating blackmail situation. And most of Congress is beholden to the banks more than their constituents anyway. I guess we learned the hard way that hasty action can sometime be worse long term than inaction. I thought we learned that already from Iraq, but I guess not.
I really believe that even FDR or Lenin himself would have been powerless in the face of such a situation. The only alternative I can think of for Obama is this (and it would have been career suicide of course): he could have bypassed the banks just as single payer insurance aims to bypass private insurers. If the banks were being stubborn, selfish a-holes who only care about their own bonuses, then forget them. Have the Treasury become the emergency federal commercial bank. Why waste time with the private sector and corrupt, inept middlemen like Fannie, Freddie, and Sallie? Why does Treasury only get to collect taxes and issue notes/bonds - they should make reasonable loans too (not just to the big banks but to us). If the banks are getting 0% APR rates, then at least give the people 2% APR and FAIR re-fi and repayment terms. If the gov't was guaranteeing banks and taking on their bad bets, then they should do the same for consumers. I don't understand macro and monetary policy much, so I am sure my idea is either illegal or impossible or both. But if the credit sector is not doing its job, then why can't the gov't step in? Commercial banking is not rocket science - it should be simple and boring and easy (especially when profit, liquidity, and shareholders are out of the equation). The staff at Treasury are probably smart enough to figure out how to make direct loans to Americans, and buy up distressed homes to take them off the market and stabilize real estate. Surely the banks would have gone to war over this, so If Obama committed to this path, I think it would have been the modern equivalent of Lincoln abolishing slavery. Very controversial, very risky, maybe ahead of its time (or overdue, depending on your perspective), but courageous, necessary, and the right thing for America's soul and future.
Otherwise we'll just inevitably descend into the United Banks of America, which we kind of are now. FIRE (finance, insurance, real estate) has risen from like 2% of GDP in the '40s to over 8% now, with no sign of reversing (and it's probably bigger when you consider private equity, derivatives, and other less transparent sectors). We lost, and we missed the one chance to really fight them - the crisis.
http://www.kauffman.org/
Since Wall St. has infected Washington, we probably can't even enact laws to establish an alternative public banking system (like credit unions but way bigger) to compete with them - and expose all their corruption and inefficiencies. There was so much anger against the banks back then, but Obama failed to make the bold Lincoln move (so I fault him on that), and now most of the anger is directed at him now (deserved or not). But this is what he gets when he surrounds himself with Geithner, Summers, and the other ex-banking, status quo crowd. They probably promised him that the banks learned their lesson and this would never happen again. And he believed them since he really wanted to fix health care, and accomplish what the Clintons failed to do.
Now to the question of how to hold Obama accountable. Unfortunately we are all out of Lincolns in US politics today. Literally Obama and Clinton may be the best ones we have, apart from "nonviable" candidates like Kucinich, Sanders, and Nader. Obviously a President McCain would have done things 95% the same as Obama, or made it even worse. And now a President Romney would give the banks more leeway. So what choice do we have but to stick with Obama? I guess we can fault him for not having a crystal ball and predicting this betrayal if he caved to the banks with no strings attached. But in a crisis we act hastily, especially with so much at stake. Krugman and many other experts were warning Obama. He should have picked real reformers in his cabinet, but I chalk that up to inexperience and his conflict-averse personality. He is not a tough love leader. It was the only time to knock the banks down to size, and we still could have rescued the economy and guaranteed a better future with a more effective banking sector. But I guess Obama was worried about being labeled as a socialist and taking on the yoke of "real reform".
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