The Whitehouse web site has a page devoted to President Obama in the State of the Union .  Here is the enhanced video of his speech.

If you liked his initiation of a Wall Street investigation and/or his call for fair taxation of the wealthy, you can express you’re opinion on the Whitehouse Facebook page.

It is no longer enough to vote every four years and watch his speeches with silent approval. To back the President in initiatives with which you agree, you have to express your agreement in a visible manner. Any opposition to the President must be made aware of the millions of voters who want him to do what he has promised. The President and his advisers must be made equally aware that we will hold him to his promises.

Note that the President is having a tough time getting around the obstructionism of a minority of Senators. The rules of the Senate allow only 41 of 100 Senators to block the consideration of any legislation. The Republicans joyfully block every initiative of the President and show their disrespect for him every chance they get. An investigation of the crimes of the major supporters of this obstructionist party is being initiated by the President without the need for approval from Congress. Perhaps moves like these are what is needed to wake up these obstructionists and their supporters. Perhaps they will start to listen to reason when the President shows them that he can still use his powers to set things right even if the Congress does not want to cooperate.

Ever since MIT made a big fanfare over opening a new science building named for David Koch, I have been telling the Alumni fund raising solicitors who call me that that they can charge this year’s contribution to the Koch brothers. I did this long before I saw the following video clip:

Although MIT is in the scroll of schools that flashes by in this video, I have no knowledge of the details of the contract signed by MIT to get the Koch brothers’ donation.

This is the only way I can watch the Republican presidential debates. I let Jon Stewart go nuts. It saves me the trouble.

If the above video does not play for you, then use this bug fix link.

The the two articles that I find to be the most embarassing Public Displays of Affection for Obama’s conservative record are The Most Important Passage from the Secret Larry Summers Memo in The Atlantic.

Constructing a package of this size, or even in the $500 billion range, is a major challenge. While the most effective stimulus is government investment, it is difficult to identify feasible spending projects on the scale that is needed to stabilize the macroeconomy. Moreover, there is a tension between the need to spend the money quickly and the desire to spend the money wisely. To get the package to the requisite size, and also to address other problems, we recommend combining it with substantial state fiscal relief and tax cuts for individuals and businesses.

and The Obama Memos in The New Yorker.

Obama didn’t remake Washington. But his first two years stand as one of the most successful legislative periods in modern history. Among other achievements, he has saved the economy from depression, passed universal health care, and reformed Wall Street. Along the way, Obama may have changed his mind about his 2008 critique of Hillary Clinton. “Working the system, not changing it” and being “consumed with beating” Republicans “rather than unifying the country and building consensus to get things done” do not seem like such bad strategies for success after all.

An administration filled with top banking executives would never come up with the solution of nationalizing the banks and cutting the principle that people owed on their mortgages.  They were giving away trillions anyway.  Why not aim some of that to clear away the housing debt overhang and prevent homelessness?  Because bank executives think they are entitled to bailouts from the treasury.  When they are faced with a catastrophe not of their own making, maybe they are entitled to a bailout.  However, when the catastrophe is brought on by their own fraud, they deserve to be nationalized and put out of business.

If the President had advisers who were not trying to save their own vested interests, there could have been ideas for effective stimulus.  There were dozens of top ranked economists advising a different strategy.  Obama chose to listen to the bankers who got us into this mess instead of the people who had no axe to grind.

He still does not see the error of his ways.  When one ex top banking executive leaves his administration, he replaces him with another.  He will never be able to solve the problem until he understands that he is getting his advice from all the wrong people.

No rush to publish fawning articles in The New Yorker, nor in The Atlantic is going to get this country on the right track.

You have to wonder where the authors of these articles are getting their economic knowledge by which they judge Obama’s behavior.  They probably consult the ex-banking executives from the same club.

January 24, 2012

The New Yorker article is pretty long. I must admit that I skimmed it rather than reading it closely before I made my original post.

Giving a closer and complete reading, it sometimes gives a mostly unbiased view of what the President did and why he did it. From my vantage point, sticking with the facts paints a very negative view of the president. It does confirm some of what I have believed to be true about the president’s performance.

Axelrod and other Obama political advisers saw anti-Keynesian rhetoric as a political necessity. They believed it was better to channel the anti-government winds than to fight them. As much as it enraged Romer and outside economists, the White House was on to something. A President’s ability to change public opinion through rhetoric is extremely limited. George Edwards, after studying the successes of Franklin Roosevelt, Lyndon Johnson, and Ronald Reagan, concluded that their communications skills contributed almost nothing to their legislative victories. According to his study, “Presidents cannot reliably persuade the public to support their policies” and “are unlikely to change public opinion.”

I believe that the president is ill served by choosing to listen to the advisers that explain that nothing can be done and it would be a waste of time to even try. Following the advice to try nothing has at least one benefit. Such a try nothing policy is guaranteed to get the results of nothing accomplished that the policy predicts. I don’t know what satisfaction the president can derive from that.

With all the former banking executives in the top posts in your administration, how can we expect you to ever propose to hold the banks and bankers accountable for their crimes? Eric Holder’s former law practice was heavily involved with the banks.

I have already asked my questions in response to this email that I received. Use holder as a search term and give it the thumbs up or thumbs down. Then ask your own question.

Yahoo is carrying the Associated Press story $25B nationwide mortgage deal goes to states.

A draft settlement between the nation’s major banks and U.S. states over deceptive foreclosure practices has been sent to state officials for review.

Those who lost their homes to foreclosure are unlikely to get their homes back or benefit much financially from the settlement, which could be as high as $25 billion. About 750,000 Americans could receive checks for about $1,800 under the deal.

This is the first report I have seen and is very sketchy as to details.

$25B seems like a paltry sum for the whole country. The direct damage the banks caused to the people they enticed into mortgage traps must be far more than that. The profits the banks made and the bailouts that they received is far larger than this.

I wonder how the banks would negotiate if nationalization of the banks were one alternative to a negotiated deal.

We will have to await a full analysis by the States Attorneys General and more thorough blogosphere to know if this is a reasonable deal.  I can only hope that the wording of the deal limits it to crimes committed over deceptive foreclosure practices, and that crimes created in initiating the mortgages in the first place are still open to prosecution.

Here is an email I received that outlines what a fair bank settlement might look like and what we could hope the President will say in Tuesday’s State Of The Union Address.

Talking Points Memo has the article Scott Brown: What About All The Rich Schoolteachers?  It starts with the paragraph:

Sen. Scott Brown (R-MA) made the case in Lowell, MA on Friday that letting the Bush tax cuts for the wealthy expire would create a burden for well-off teachers, firefighters, and police officers.

The tenor of most of the comments was about how dumb Scott Brown is  to not understand that there would be little burden to these public servants even for the tiny minority that did manage to earn incomes above $250,000.

It is not Scott Brown who is too dumb to understand the concept of the higher marginal tax rates only applying to the part of the earnings that are above $250K.  He knows that the people listening to him don’t understand.  When he makes these comments, he is just reinforcing their misunderstanding to use for his advantage.

When I was in college, I had a friend who was studying accounting.  He was afraid that if he earned more money he would be in a higher tax bracket and would therefore take home less money.  I never could explain to him the concept that there is no marginal tax rate that is above 100% which is what would be necessary for his nightmare scenario to be true.  In other words for each extra dollar he earned in the new tax bracket, he would get to keep a large share of it after taxes.  So his total income after taxes would increase for each extra dollar he earned.  He wasn’t going to be richer by refusing a salary increase.

I have been competely unsuccessful in explaining to the Warren campaign that she cannot just assume everyone will recognize the flaws in Brown’s ideas.  He is spending a lot of time miseducating the voters.  If she doesn’t spend a greater amount of time educating the voters, then she might lose.  And even if she wins, she won’t be able to be an effective Senator because of all the misinformed voters that will not want her to do the things that need doing.  Large numbers of middle-class people will be against her raising taxes on the wealthy, because of their flawed understanding of what that means.  These people will be against regulating the banks because they mistakenly think it will be bad for the economy.  These people will be against more economic stimulus because they mistakenly believe that raising taxes on the wealthy to pay for the stimulus will be bad for the economy.  They mistakenly believe that higher taxes on the wealthy is penalizing success, when it is in fact penalizing the taking unfair advantage of the rest of us.

Some of the wealthiest of the wealthy 1% made their money by vulture capitalism stealing the pension funds from the corporations they take over and then walking away from the debts they made the company incur in order to pay the vulture’s high earnings above what they took in pension funds. They also sold off all the company’s productive assets that were no longer needed after all the jobs had been shipped overseas.  They got rich by all their schemes that made other people poor.  This also had the salutary effect for these vultures of getting rid of the labor unions who might be strong enough to resist them.

Others of this class made money by enticing unsuspecting homeowners to take out mortgages with low initial teaser interest rates, so that they would borrow more than they could really afford to when the interest rose to its final, real rate.  These mortgage scammers then sold these mortgages to unsuspecting investors who were falsely given assurances that these were high quality mortgages.  Moreover, the mortgages were valued as if the borrowers would eventually pay the higher interest rates, which the lenders were assuring the borrowers that they never would have to pay. When the trap was sprung, the borrowers lost their homes, the investors lost their investments, and the con artists walked away with huge profits. Of course the profits grew even more when the tax payers bailed out the banks and bankers that had done the scamming.

The Moyers & Company episode David Stockman on Crony Capitalism starts with:

Moyers & Company explores the tight connection between Wall Street and the White House with David Stockman, former budget director for President Reagan.

Now a businessman who says he was “taken to the woodshed” for telling the truth about the administration’s tax policies, Stockman speaks candidly with Bill Moyers about how money dominates politics, distorting free markets and endangering democracy. “As a result,” Stockman says, “we have neither capitalism nor democracy. We have crony capitalism.”

Stockman shares details on how the courtship of politics and high finance have turned our economy into a private club that rewards the super-rich and corporations, leaving average Americans wondering how it could happen and who’s really in charge.

“We now have an entitled class of Wall Street financiers and of corporate CEOs who believe the government is there to do… whatever it takes in order to keep the game going and their stock price moving upward,” Stockman tells Moyers.

This episode is a perfect example of why I sometimes stop watching Bill Moyers’ shows. The truth he tells is just too depressing. For someone like me, whose faith in President Obama has already been severely shaken, this show makes it even more difficult to conceive of supporting Obama in the 2012 election.

Can the President’s State of the Union speech on Tuesday contain anything that will change my mind? There are many things he could say, but I have my doubts he will say them. Is he going to say that his administration is now going to promote policies that are against the best interest of all of his own senior advisers? If he fails, that will just further cement my disappointment.

My previous post Elizabeth Warren And Hillary Clinton Trade Lessons has this disheartening quote from Elizabeth Warren:

…I believe that Mrs. Clinton was responsible for President Clinton’s veto of that bankruptcy bill. Ultimately, Congress passed the bill again in 2005 and George Bush signed it into law. But in that five-year period in between, eight million families went through the bankruptcy system, while the law was still intact. So the veto was important, and I believe she was the cause. And that’s what’s so disheartening. She changed her vote in the Senate. If Hillary Clinton, one of the strongest, most independent politicians of her generation, felt that she needed to conform her voting to the desires of the banking industry once she held elective office, what hope is there for the rest of the politicians?

I think I can detect in the way that the Warren campaign is running, that Warren has already found the need to conform her votes to the desires of the banking industry.

I did find the video of our protest. Pardon the commercial.

Wouldn’t you know that they would pick the snip-it of the part of the interview where I was most tongue-tied and conveyed the least amount of information. They also picked the part of the statement that did not implicate the big banks and bankers.

For a little background on this rally, see my previous post Robert Reich: Why We Should Investigate Banker Mortgage Fraud.