Obama Gives Automakers a Short Lifeline


WASHINGTON — President Obama delivered an ultimatum toGeneral Motors and Chrysler on Monday, telling them to adopt radical changes in short order or face bankruptcy — a move that came after a series of somber discussions in which he concluded that a controlled bankruptcy might be the best way to reorganize the two ailing auto giants.


In the end, the president decided to throw the companies a short lifeline. He gave G.M. 60 days and Chrysler one month to avert bankruptcy and restructure on their own. Continue reading

What Did You Think of Obama’s News Conference?



In his second prime-time televised news conference, President Barack Obama on Tuesday night emphasized he has had to make a lot of important decisions just two months into the job, but none of them have been rash.

This theme of cautious action was driven home when CNN’s Ed Henry pressed the president on why it took the White House two days to comment on the shocking revelation that AIG executives had received large bonuses. “It took me a couple of days because I like to know what I’m talking about before I speak,” he replied pointedly. Continue reading

Official says China to continue buying US debt


BEIJING (AP) — China will continue buying U.S. government debt while paying close attention to possible fluctuations in the value of those assets, a vice governor of Beijing’s central bank said Monday.

Investing in U.S. Treasury bills is “an important component part of China’s foreign currency reserve investments,” People’s Bank of China Vice Governor Hu Xiaolian said at a news conference on Monday. Continue reading

Networked Leaders

CAMBRIDGE – In an environment of mobile phones, computers, and Web sites such as MySpace, Facebook, and LinkedIn, it is commonplace to say that we live in a networked world. But different networks provide new forms of power, and require different styles of leadership. Barack Obama understands this; indeed, it helped to secure his victory. Continue reading

Obama says treasury secretary’s job is secure

In interview, Obama says Treasury chief Geithner’s job is safe; responds to Cheney criticism

WASHINGTON (AP) — President Barack Obama says treasury secretary is one job that’s not up for grabs.

In an interview with CBS’ “60 Minutes” Obama said that if Treasury chief Timothy Geithner offered his resignation, the answer would be, “Sorry buddy, you’ve still got the job.”

Obama also took the opportunity to strike back at recent comments by former Vice President Dick Cheney, who claimed that plans to close the Guantanamo Bay detention center will make the U.S. less safe. Continue reading

AIG: Congress Passes Tax, Refuses to Demand Recall of Executive Bonuses


It appears that the political subterfuges in the AIG fiasco just keep pouring from the Halls of Congress and Capitol Hill now daily.

The most recent word is that Congress has overwhelming passed a bill which now will tax the bonuses recently handed over to the executives of AIG by the Executive Office’s lackey, Timothy Geithner, last Sunday. It appears maybe this is Mr. Obama’s answer to “pursuing every legal course available” in order to “get back” those bonuses. The tax measure was passed again in haste by Congress, and was reported to involve a 90% return to the U.S. Treasury of the sums afforded those executives, many of which received literally millions in claimed unpaid bonuses.

You do the math. 10% of 20 million dollars (the amount of bonuses paid, after all, were over 165 million) is still 2 million dollars. Add interest since those sums will not be due for another year at the U.S. rate of interest and you have a pretty sizeable bonus (not to mention most of those sums will go to the Caymans). In fact, I wonder if the amounts of those bonuses weren’t inflated to begin with in order to provide such a cushion to those executives for just such a maneuver.

Not to mention the fact that within the terms of that bailout, Congress actually disempowered themselves from any such actions against the Executive branch to whom they acceded all power and control over the distribution. This move now is a corporate tax attorney’s dream, and by the time it winds its way through the courts when those executives challenge such a move, their interest and profits will have quadrupled on those original illegally distributed bonuses.

And Mr. Obama is, after all, a lawyer – although appears to be so far no Constitutional lawyer, so as such well aware that these executives can use such loopholes to eventually avoid repayment fighting through the U.S. Tax Courts if U.S. citizens (then again, since AIG is a global concern and now even “corporate” foreigners have been given “rights” simply intended for the American citizens by the founders, even that little technicality I’m sure at this point would be overlooked).

The spins now are getting to the point where most Americans are not simply outraged anymore, they are nauseous.

By Betsy Ross

Does President Obama watch American Idol?! Jay Leno drops the ball

American Idol came up, believe it or not, as President Barack Obama went on “The Tonight Show” with Jay Leno, becoming the first sitting president to appear on a late-night talk show.

Washington, D.C. “is a bit like ‘American idol’ except everybody’s Simon Cowell. Everybody’s got an opinion,” President Obama told Jay, according to the New York Times’ The Caucus blog.

(The Times reporter must not have time to watch the show, since he doesn’t seem to know it’s “American Idol,” not “American idol.”)

Click here to see photos of President Obama on Jay Leno, and around L.A.

Is it possible that President Obama is watching American Idol?! It doesn’t seem like Jay Leno asked him that obvious question.

Back when he was running for president, President Obama did do a taped appearance for the Idol Cares charity show, along with Sen. John McCain. At the time, he said his daughters watch the show; so at the very least he’s probably watched some of it by accident.

If the president is watching the current season, I wonder who he’s rooting for… my guess would be Anoop Desai–the intellectual guy who’s actually pretty cool. Or Allison Iraheta–the young talent who’s startling people with her big voice.

Or, maybe Adam Lambert, the guy who does his own thing and has lots of people who love him, but a few who really, really don’t.

President Obama apparently made a few jokes during his appearance on Leno show, but spent a big chunk of time talking about the economy — trying to reassure Americans that it may take a while but we’ll get out of the current mess.

The entire point for President Obama to go on Leno was to try and reach millions of Americans who might not always be reading the newspapers and watching the news, but are still worried about the recession and will probably appreciate a chance to hear our president explain his policies (the show airs tonight, at 11:30 p.m. EST on NBC).

Hey, I know another show where President Obama could get his message out to lots of people… the biggest show on television, actually….

Just one piece of advice: It’s not a good idea to try and sing Whitney.

Would President Obama like watching this season’s “American Idol”? Who would he root for? Is it a good idea for him to go on shows like Jay Leno’s to reach people, or is that unpresidential? Tell us what you think in the comments, below. (Please don’t be vulgar or profane in your comments; those will be deleted).

1) Click here to see photos of President Obama on Jay Leno, and around L.A.

2) Click here to see our “President Obama, he’s just like us!” photos

3) Click here for photos of the “American Idol” finalists performing each night

4) Vote in our poll, for your favorite finalist now that we’re down to 10

5) See photos from inside the after-party for the 13 “American Idol” finalists

6) Check out the other entries, conversations and latest news on our American Idol blog


Is This America’s Dark Knight?


In last year’s hit movie, The Dark Knight, there is a classic scene between Alfred and Bruce Wayne. A befuddled Bruce cannot figure out what the Joker is actually trying to gain, and he is sharing his consternation with Alfred. Alfred responds by telling Bruce that some men are just different and, in one of the great lines of the movie, states bluntly, “Some men just want to see the world burn.”

While it is quite early on in the new administration’s term in office, it appears to be behaving in exactly this way. Obama is playing the part of the Joker to perfection, aided and abetted by the likes of Nancy Pelosi and Harry Reid. The only difference being that, instead of wearing a clown’s face, he has chosen to look promising and speak lofty words of nothingness as he and the other Democratic leaders push the nation ever closer to economic collapse.

Ignoring any sound economic principles, these leaders have carved a path of prodigality unmatched in American history. It seems as if they desire the total economic failure of the country.

To be sure, the Bush administration has left the nation ravaged by its excess spending and monetary expansion that undergirded the housing bubble. Indeed, during his eight years in office, federal spending ballooned from $1.8 trillion per year to nearly $3 trillion. That is a 67% increase! But while Bush radically expanded the size and scope of government, Obama and the Democrats plan the absolute explosion of it. The Congressional Budget Office estimates that this year’s federal spending will top $3.5 trillion, with a deficit in excess of $1 trillion. And this number was forecasted prior to the passage of the so-called “stimulus bill.”

Imagine Bush as a drunken sailor in port for the first time in a year. He goes into a casino in Atlantic City, sits down at a thousand-dollar-a-hand blackjack table, and promptly loses a million dollars. Obama comes in as Bush’s replacement, and the casino seats him in Bush’s old chair. While bemoaning the situation, Obama tells us we must end this failed policy by moving up to the ten-thousand-a-hand table and doubling down. Of course, this makes no sense whatsoever, and the sane person would quickly back away. But sanity appears not to be present anywhere in Washington these days.

For far too long now, we have allowed our leaders to take us in this direction. In earlier days our leaders did so mainly to line their own pockets and those of their favored friends. These days, however, it seems that they are merely driven by their own ideological madness. And we have been too busy to pay enough attention to understand the situation and to resist it. Neither Bush nor Obama could do the things they have done or are doing had there not been a long history of governmental abuses. To not understand this now will lead to even greater abuse in the future.

“If there is any hope for our economic future, we must come to a sound understanding of what got us here.”

This was my motivation for my new book, titled Unmasking the Sacred Lies. I wanted to help busy Americans come to grips with the current economic situation and to understand the long political process of change that has led us here.

If there is to be any hope for our economic future, we must come to a sound understanding of what got us here. With that in mind, I put together a book that paints the big picture. It traces the economic history of each policy area in order to demonstrate how each law passed by Congress and enforced by our government has pushed us into this hole that we find ourselves in today.

It is my firm belief that providing the average person with the right information in a readily understandable format can make a difference. I only hope that it is not too late, and that we do not have to watch America burn.


Mises Daily by

When Obama’s cool isn’t cool

Everyone is aghast at the AIG bonuses. It would be nice if the president could show a little anger about the situation too

 Back in 1981, shortly after Ronald Reagan took office, America’s air-traffic controllers (the Patco union) went out on strike over their incredibly stressful working conditions and pay. Reagan, rather than negotiating with the union, just fired them. It was a legal move (there are laws prohibiting vital public employees from striking). It was tremendously controversial in the press, but since unions weren’t winning many popularity contests in those days, a solid majority of public opinion backed Reagan.

Now Barack Obama faces his Patco moment. If a fire hadn’t been lit under him before about the scandalous AIG bonuses revealed over the weekend, then it certainly was by this headline across the front page of this morning’s Washington Post: Anger over firm depletes Obama’s political capital. The first paragraph makes matters pretty clear:

President Obama’s apparent inability to block executive bonuses at insurance giant AIG has dealt a sharp blow to his young administration and is threatening to derail both public and congressional support for his ambitious political agenda.

Lawmakers in both parties, like the public in general, are aghast at the bonuses, and at the fact that treasury secretary Tim Geithner approved them. Obama yesterday morning announced he was instructing Geithner to find a way for the government to stop the bonus payments. But why did it take a firestorm that couldn’t have been very difficult to predict for Obama to take this step?

Here’s the downside of Obama’s famous cool. Most of the time, it’s good to have a president who isn’t a captive of his emotional temperature and doesn’t say rash things. Americans got pretty tired of that over the last eight years.

But sometimes, geez, you just want the guy to let it out. Yesterday’s press conference was about as close as he came to anger, but it wasn’t close enough.

Now, the administration will have to find a way to fight these bonuses. Rest assured that someone in treasury will, later this week, miraculously locate a provision under which the government can seek to void the contract.

But here’s where this situation is different from the one Reagan faced, and it’s a very important difference and a thorny one for Obama. Reagan had the law on his side. Obama probably does not. A contract’s a contract. Depending on your mood it’s either amusing or appalling to read AIG boss Edward Liddy’s letter to Geithner from last week in which he wrote that “honoring contractual commitments is at the heart of what we do in the insurance business”.

Insurance companies screw little people all the time, but huge firms with sharp lawyers, well, that’s another matter. And so we also have today Andrew Ross Sorkin in the New York Times arguing that the government risks setting a dangerous precedent if it voids the contracts:

If government officials were to break the contracts, they would be ‘breaking a bond’, Ms Meyer says. ‘They are raising a whole new question about the trust and commitment organizations have to their employees.’ (The auto industry unions are facing a similar issue – but the big difference is that there is a negotiation; no one is unilaterally tearing up contracts.)

But what about the commitment to taxpayers? Here is the second, perhaps more sobering thought: AIG built this bomb, and it may be the only outfit that really knows how to defuse it.

AIG employees concocted complex derivatives that then wormed their way through the global financial system. If they leave – the buzz on Wall Street is that some have, and more are ready to – they might simply turn around and trade against AIG’s book. Why not? They know how bad it is. They built it.

Lovely thought.

But the administration has no political choice now. How much damage did the Obama folks do to themselves over the weekend with their passivity? A fair amount I’d say. Most of it can probably be undone with a tough posture now. Results are what matter to most people. If at the end of the day the bonuses aren’t paid, most voters (and legislators) will be satisfied.

Then again, what if the administration loses in court, which seems entirely possible? I guess if I were in the press shop, I’d spin that at least we tried. We went up against a legal system that’s rigged for big corporations. And then hope for the best. Of course, a judicial outcome could take years, and the public perception of AIG fighting in court for piggy bonuses might be such that they wouldn’t even bother if the government forced their hand.

And what Obama ought to learn from this personally is that there are times when cool isn’t cool. If people are angry, he’d better get angry too.

AIG bonuses leave Obama in a tough spot

AIG bonuses leave Obama in a tough spot

As outrage boils over the bonuses promised to executives at AIG, the ailing insurance giant that has received a massive federal bailout, President Obama finds himself in a precarious political position.

If the public, and their elected representatives in Washington, conclude that Mr. Obama and his administration did not do everything in their power to halt the bonuses, that could hinder the government’s ability to gain congressional approval for future measures aiming at righting the struggling economy. Obama’s entire agenda could be at risk, some analysts have suggested.

But the president is unlikely to deplete his political capital completely. Obama has shown, during both his campaign and the opening weeks of his presidency, a responsiveness to criticism and a willingness to change course that could, once again, keep him on track. Over the weekend, the message from various Obama administration officials was, essentially: “There’s nothing we can do about the AIG bonuses. A contract is a contract.”

Come Monday, Obama demonstrated that there was something to be done: Try to shame AIG execs into turning down their “retention payments.” Instead of allowing himself to be engulfed by populist outrage, Obama joined the chorus. He ordered his Treasury secretary, Timothy Geithner, to try again to find a legal way to block the $165 million in bonuses. And even though that still seemed impossible by day’s end, administration officials were saying that the Treasury Department was working on recouping the cash by retooling the terms of the latest infusion of federal cash, $30 billion, granted to AIG.

“If Obama had stuck with his original position … that would have been highly problematic,” says Darrell West, director of Governance Studies at the Brookings Institution. “But now they seem to be shifting to a more aggressive stance … by employing the shame strategy.”

The administration is “hoping that there’s enough public pressure and late-night comedy pressure to force voluntary action from AIG,” Mr. West adds. “The longer this stays in the news, the greater the chance that effort will be successful. A company is ready to take one day of bad news, but when it gets to be two, three, four days, they capitulate.”

At this point, facts seem to be less important than public perceptions. And in fact, AIG has already stated that it is seeking ways to repay the American people for what it calls “retention payments” to employees. In a letter to Treasury secretary Geithner, AIG chairman Edward Liddy laid out ways the company is reducing compensation to employees, especially those in the Financial Products division that engaged in the risky behaviors.

But for AIG, the damage is already done. It has become the face of corporate greed, and Obama is doing all he can to convince Americans that he’s as outraged as they are. On Thursday, he will appear on “The Tonight Show with Jay Leno” to talk about the economy, and it’s a safe bet that AIG will come up. Obama gets plenty of face time in the political media, and on cable TV, but by setting a new precedent – he will be the first sitting president to appear on late-night TV – he is going beyond the usual audience of political junkies and policy wonks and reaching out to “real America.”

Obama may also get some help from New York State’s attorney general, Andrew Cuomo, who has launched an investigation into the bonuses and threatened a subpoena to AIG to get a list of the names of bonus recipients. If Mr. Cuomo is able to get the names and they are publicized, the shame tactic could reach a new level.

In the meantime, members of Congress and interest groups are also joining the populist wave. One House member, Rep. Gary Peters (D) of Michigan, has introduced legislation that would recover the full value of the bonuses through a surtax.

One of the nation’s largest labor unions, the Service Employees International Union, announced protests to take place Thursday at financial institutions around the country. The union and other organizers say 10,000 Americans will take part in more than 100 protests in more than 30 states. The protests will call for banking reform and universal healthcare, and also show support for a controversial measure now before Congress called the Employee Free Choice Act, aimed at making it easier to form unions at businesses.

On Tuesday, House Republican leader John Boehner of Ohio expressed outrage over AIG at a press conference.

“Two weeks ago, the president’s spokesman said that they were confident that they knew how every dime was being spent at AIG,” said Mr. Boehner. “Well clearly, they didn’t know what they were talking about.”

In the past, Boehner has blamed both the Obama administration and the administration of George W. Bush for not putting forth an “exit strategy” that would put an end to government bailouts of private business.

Obama himself has repeatedly made clear that he inherited the bailout of financial institutions from Bush. But with each passing day, Obama takes on political ownership of the nation’s financial crisis.

“The initial steps to take over AIG happened on Bush’s watch, and to me, that’s the finest line of all – putting some of the blame where it belongs without looking like you’re shirking responsibility,” says Jennifer Duffy, a political analyst at the Cook Political Report. “I think that’s a line they have walked on the economy from Day 1.”