A sympathetic if mildly damning review of the first two years of Barack Obama's government, with a really wicked title, when you think of it. Con men?
The main idea is that politics and finance in the USA have become a game of confidence. The manufacturing of confidence, or the appearance of confidence divorced from competence has come to rule the "two capitals", Washington and Wall Street.
The most interesting thing for me in reading this book was to get the background on many of the recent events in American politics and finance, reading about these things and remembering having actually seen them happen. It is a good explanation as any of why President Obama was not able to fulfill his own hopes and expectations in the first two years of his reign. We follow the President from crisis to crisis as he struggles to keep his head above water while dealing not only with almost impossible political and economic troubles, but a clutch of headstrong advisers led by Larry Summers and Rahm Emanuel, who seem themselves as master puppeteers.
The book ends in a note of hope, as Obama cleans house after the mid-term "shellacking" and seems to finally figure it out, leading to a series of modest but important victories.
“I think where the evolution has taken place,” Barack Obama said finally, looking into the middle distance, “is understanding that leadership in this office is not a matter of you being confident. Leadership in this office is a matter of helping the American people feel confident.”
Quotes:
By being himself—an alluring and inspiring self, supremely confident yet expressing humility, speaking powerfully of grabbing history’s arc and bending it toward justice—Obama became the first black president. But more and more, walking the halls of this building, he doesn’t feel like himself—someone who could bring people together, who could map common ground and, upon it, build a future.
Confidence, in fact, was Geithner’s currency. He viewed his role, then and later, as assuring confidence in the financial markets, by any means necessary, at whatever cost.
This is how financial firms die in this era. It’s not from losses, or declining revenues. It happens when they can’t roll their debts—essentially replacing old credit cards with new ones, every day.
But gazing now at Obama, who talked warmly, sympathetically, with those facing fiscal ruin, Warren couldn’t help but wonder if the country might soon have a president who would fight, really fight, for the little guy.
It all boils down to the classic Larry Summers problem: he can frame arguments with such force and conviction that people think he knows more than he does.
“A few weeks ago, John McCain said that the economy is ‘fundamentally strong,’ and a few days later George Bush said the same thing. In fact, Senator McCain has said that we made ‘great progress economically’ over the last eight years. And here’s the thing. I think they truly believe it.” (Barack Obama)
“This I know,” Obama said. “When I raise my hand and take that oath of office, I think the world will look at us differently. And millions of kids across the country will look at themselves differently.”
As was so often the case, people saw in Obama largely what they wanted to see.
Obama, after all, had selected for his top domestic officials two men whose actions had contributed to the very financial disaster they were hired to solve.
On Wall Street, any firm with compensation barriers would just have its employees stolen by a competitor who was not similarly restricted.
As the president tried to rise to the demands of his job, the White House was increasingly being directed by a back-channel union between two forceful men: Rahm Emanuel and Larry Summers.
Rahm Emanuel waited until the president was fully out of the room and then seized the floor. “Everyone shut the fuck up. Let me be clear—taking down the banking system in a program that could cost $700 billion is a fantasy.
The administration’s domestic policy was fast becoming a debate society run by Larry Summers.
Improbable combinations, blended solutions, the integrating of opposites. This was the Obama method, in his life and in his work. But he hadn’t gotten elected simply to search for this clever version of the middle ground. He’d been elected at a time of peril to change the country’s course.
he missed some opportunities to show that America hadn’t necessarily gone from a country that makes things to one that makes things up
Confidence is the public face of competence. Separating the two—gaining the trust without earning it—is the age-old work of confidence men.
“I mean it,” Summers stressed. “We’re home alone. There’s no adult in charge. Clinton would never have made these mistakes.”
The Tea Party movement, fueled by Fox News, rose out of the heartland and spread. Talk of “death panels,” another brilliant bit of rhetorical mischief from the Republican Party, dominated the airwaves. Obama and his surrogates spent much of July trying to wash the smell of death panels off their skin like someone who’d been in a bad run-in with a skunk.
moving from partnerships to publicly traded corporations in the early 1980s—allowing partners to take their money off the table and replace it with other people’s money, thereby severing the bonds of caution and shared risk—marked the moment Wall Street started to grow into a destructive force
The Obama presidency didn’t end in the fall of 2009, but it came close.
If there was, in fact, a single operational victory in this period, it involved secrecy: the strife inside the White House was largely kept from public view. Rather than the Cheney-driven secrecy models of the Bush days—where cell phones were White House–issue and where problematic phone numbers, such as those of major newspapers, were regularly searched through shadow directories—the Obama secrecy was born of old-fashioned loyalty.
The dilemma, at that juncture, had two edges. Do anything necessary, at any cost, to win Massachusetts; and use the threat of a loss, and the loss of the filibuster-proof majority in the Senate, to get an emergency reconciliation, in a matter of days, of the two competing health care bills. The White House did neither.
By early 2010 the banks had, in fact, notched their easiest victory in years by simply lending that fresh Fed money back to the planet’s largest, safest, and still hungriest customer for debt: the U.S. government itself.
while investing in America is passé—returns are much better overseas—anticipating U.S. regulatory moves and trading accordingly is one of America’s signature growth industries
Like so many other disasters in this period, the [BP Gulf of Mexico] spill was the result of executives pushing themselves to the very edge of legal limits, and then beyond, in the name of short-term profit.
Both Presidents Roosevelt—one Republican, the other Democrat—would have said, if they could still walk upright, that government should not be a friend of business; that business can take care of itself; and that government has more important work to do, to carry forward the “greatest good for the greatest number.”
what Voigtman had just described to Gensler went far beyond the prudent hedging of downside risk. It was Goldman building customized weapons to take advantage of a unique, once-in-a-lifetime market-driven disaster that no one could have foreseen. No one except someone who had helped construct it, by providing the “liquidity” of a burgeoning menu of short-side products, to sate all the “upside” thirst in the world.
Those amendments, complex and esoteric to the passive onlooker, were all variations on the same melody: how to prevent the systemic risk of “too big to fail.”
[...]
One by one, in spite of bipartisan support, they had all failed.
GDP or unemployment rates—imperfect measurements to start with—are often quietly changed several months after their news cycle-driving “release” has already had a profound effect on politics, public statements, quickly fashioned policies, and, by association, public confidence.
If the election had proven anything, it was that American politics were still a realm of striking volatility. Obama had fallen from historic highs to crushing defeat in just two short years. But it was also a reminder that, from now on, anything could happen.
Nearly 30 percent of Medicare costs are spent on end-of-life care, a stunning figure considering that most beneficiaries arrive into Medicare at sixty-five and the average life expectancy is seventy-nine. In the last year of life, covered medical costs average nearly $30,000.
I, like many Americans, felt a surge of pride when an African American was elected president. It took some time for me to see him simply as a man, with the full complement of gifts and faults, occupying the White House.
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