[ok, I'm going to break my rule and talk about the markets for one post, simply because two big stories broke that I think have larger ramifications than people are aware of]. This commentary ties in to the PR comments I've made about Obama as well]
Goldman Sach's CEO, Lloyd Blankfein, and other Goldman Sachs executives have each retained outside legal counsel. Lloyd has hired Reid Weingarten (the lawyer who defended Bernie Ebbers of Worldcom and Richard Causey of Enron).
Apparently the Sachs executives are getting outside counsel after the US Senate prepared a report and sent it to the Justice Department. Obviously the Sachs executives are gearing up to respond to legal issues beyond Sachs as a corporation. They are preparing to defend their own actions as individuals.
The other story that caught my attention was the president of Standard and Poor's - the rating agency that recently downgraded the US to double-A - stepped down from his position as president.
While this news is flying under the radar of the general public, I find these two things fascinating and suggestive that something is happening in Washington that is scaring these executives in to either trying to get out of sight or adopt a pre-emptive defensive position.
If I had to guess, with Obama crashing in the polls, this could be a prelude to one heck of a power move by Obama.
If we imagine for a second that the economy, unemployment, GDP, the stock market, all get worse over the next 12 months. Obama's approval ratings, which are already in the toilet, will basically be in full arrest and will need a crash cart to be revived.
The one thing that could revive his approval ratings - once again, if we imagine public anger rising dramatically over the next twelve months - would be to round up the wall street bankers and ratings agencies (the folks who caused all this) and to essentially toss them all in jail.
It's worth considering that as this crisis has unfolded Obama has treated the bankers and rating agencies with kid gloves, for a variety of reasons:
1) the financial sector contributed huge amounts of money to his campaign
2) Main Street (ie. people's 401ks) are held hostage by Wall Street (you can't hurt Wall Street without hurting mainstreet)
3) In the midst of a crisis he had no option but to re-liquidate the banks and hope they did the right thing and used that money to get the American economy moving (which they didn't do, they just sat on the cash to protect themselves should a double dip occur). He couldn't spend three years hauling bankers to jail, he needed the peopel who created the mess to clean up the mess.
However, it's clear now that the 'mess' is not being cleaned up. They brought all the bank debts on to the government books and the economy is still in a death grip of paralysis.
Obama may very well be preparing to play to the populous anger and give people what they want - the bankers heads in a noose.
Further speculative fire to this theory was that Tim Geithner wanted to leave the Treasury last month, but was convinced by Obama and Biden to stay. It's possible Geithner wanted to leave not just because the US was bound for harder times, but if the administration was going to clean house on Wall Street, a lot of those guys are personal friends of Geithner's.
It's entirely possible that should such an action be taken, he doesn't want to be a part of sending his friends to jail.
As always, I view things from the perspective of a PR lens. What is clear is that Obama's brand is tarnished beyond repair. And he doesn't have enough time - 12 months or so - to repair three-years worth of damage to his brand. Even if the economy started to turn around, there's simply no way it can turn around fast enough to make a dent in the unemployment stats by election time (and based on the cuts companies are currently doing, it's clear unemployment is going higher).
So he will be faced with a furious population facing inflation, high unemployment, depressed housing market, depressed 401ks and a baby boomer generation watching their retirement slip away.
The only thing that will play to that audience will be blood - the only thing that will appease them will be having an attack dog that goes after everyone they believe caused the mess.
Now the Republicans are already positioning to play that role and blaming Obama for the mess (and in a way he is partly responsible, in conjunction with Bush). At this point in time you can't fault them for thinking that strategy will work (because it will).
But if Obama turns the tables and goes after Wall Street, he could rise to be the people's champion yet. But he'd have to go after them with teeth and people would have to go to jail. Not to mention, the stock market would crash, so this is something Obama can only do if populous rage is so high that people don't care about their 401k's losing even more money (and believe it or not, a lot of people are already at that point - or more precisely, they've left the stock market).
The thing that clearly has handcuffed Obama to date has been that he needed Wall Street to help end the recession. However, since it's becoming clear that the recession doesn't seem to be ending (sure, GDP rose slightly and we all declared the recession over, but that's ridiculous, for the lower and middle class the recession never ended) Obama doesn't really have any incentive anymore to work with them.
Quite the opposite in fact. The only strategy he has left that might save his re-election is to be the voice of anger for the people.
When you look at Obama's behavior in war we see a man who generally speaking gives his enemy a 'cease and desist' warning. When the enemy doesn't cease and desist he sends in the flyer drones and hits them hard. He tries compromise, but when it becomes clear that the other side will not compromise, he attacks full force.
Now, he has refrained from doing this with Republicans and Wall Street, but that time may be coming to an end - he may be getting ready to attack full force.
Facing an angry America and with nothing left to lose, and perhaps even a feeling of betrayal towards the financial sector, Obama may just yet surprise us. The departure of Poor's president and Sachs executives all bringing in personal lawyers (on top of their existing corporate lawyers) says to me that there's a storm coming and they are scared.
As I've said many times before, I think the 2012 election will go down as the most interesting presidential election perhaps in the history of America.
Goldman Sach's CEO, Lloyd Blankfein, and other Goldman Sachs executives have each retained outside legal counsel. Lloyd has hired Reid Weingarten (the lawyer who defended Bernie Ebbers of Worldcom and Richard Causey of Enron).
 |
| Lloyd Blankfein |
The other story that caught my attention was the president of Standard and Poor's - the rating agency that recently downgraded the US to double-A - stepped down from his position as president.
While this news is flying under the radar of the general public, I find these two things fascinating and suggestive that something is happening in Washington that is scaring these executives in to either trying to get out of sight or adopt a pre-emptive defensive position.
If we imagine for a second that the economy, unemployment, GDP, the stock market, all get worse over the next 12 months. Obama's approval ratings, which are already in the toilet, will basically be in full arrest and will need a crash cart to be revived.
The one thing that could revive his approval ratings - once again, if we imagine public anger rising dramatically over the next twelve months - would be to round up the wall street bankers and ratings agencies (the folks who caused all this) and to essentially toss them all in jail.
It's worth considering that as this crisis has unfolded Obama has treated the bankers and rating agencies with kid gloves, for a variety of reasons:
1) the financial sector contributed huge amounts of money to his campaign
2) Main Street (ie. people's 401ks) are held hostage by Wall Street (you can't hurt Wall Street without hurting mainstreet)
3) In the midst of a crisis he had no option but to re-liquidate the banks and hope they did the right thing and used that money to get the American economy moving (which they didn't do, they just sat on the cash to protect themselves should a double dip occur). He couldn't spend three years hauling bankers to jail, he needed the peopel who created the mess to clean up the mess.
However, it's clear now that the 'mess' is not being cleaned up. They brought all the bank debts on to the government books and the economy is still in a death grip of paralysis.
Obama may very well be preparing to play to the populous anger and give people what they want - the bankers heads in a noose.
 |
| Tim Geithner |
It's entirely possible that should such an action be taken, he doesn't want to be a part of sending his friends to jail.
As always, I view things from the perspective of a PR lens. What is clear is that Obama's brand is tarnished beyond repair. And he doesn't have enough time - 12 months or so - to repair three-years worth of damage to his brand. Even if the economy started to turn around, there's simply no way it can turn around fast enough to make a dent in the unemployment stats by election time (and based on the cuts companies are currently doing, it's clear unemployment is going higher).
So he will be faced with a furious population facing inflation, high unemployment, depressed housing market, depressed 401ks and a baby boomer generation watching their retirement slip away.
The only thing that will play to that audience will be blood - the only thing that will appease them will be having an attack dog that goes after everyone they believe caused the mess.
Now the Republicans are already positioning to play that role and blaming Obama for the mess (and in a way he is partly responsible, in conjunction with Bush). At this point in time you can't fault them for thinking that strategy will work (because it will).
But if Obama turns the tables and goes after Wall Street, he could rise to be the people's champion yet. But he'd have to go after them with teeth and people would have to go to jail. Not to mention, the stock market would crash, so this is something Obama can only do if populous rage is so high that people don't care about their 401k's losing even more money (and believe it or not, a lot of people are already at that point - or more precisely, they've left the stock market).
The thing that clearly has handcuffed Obama to date has been that he needed Wall Street to help end the recession. However, since it's becoming clear that the recession doesn't seem to be ending (sure, GDP rose slightly and we all declared the recession over, but that's ridiculous, for the lower and middle class the recession never ended) Obama doesn't really have any incentive anymore to work with them.
Quite the opposite in fact. The only strategy he has left that might save his re-election is to be the voice of anger for the people.
Now, he has refrained from doing this with Republicans and Wall Street, but that time may be coming to an end - he may be getting ready to attack full force.
Facing an angry America and with nothing left to lose, and perhaps even a feeling of betrayal towards the financial sector, Obama may just yet surprise us. The departure of Poor's president and Sachs executives all bringing in personal lawyers (on top of their existing corporate lawyers) says to me that there's a storm coming and they are scared.
As I've said many times before, I think the 2012 election will go down as the most interesting presidential election perhaps in the history of America.
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