Re: Mythbusting the Obama Magic

[David Farber <dave () farber net>]

Begin forwarded message:

From: "Bob Frankston" <bob2-39 () bobf frankston com>
Date: January 4, 2010 3:02:00 PM EST
To: <dave () farber net>, "'ip'" <ip () v2 listbox com>
Subject: RE: [IP] Re: Mythbusting the Obama Magic

It’s unclear if leadership is compatible with dealing with complex situations. If you look at Reagan’s leadership how 
much of it was inspiring but dysfunctional?
 
It’s difficult to manage expectations especially when single-issue politics is a gating factor in the primaries and 
later elections. By its nature single issue politics forces us into wide swings which can drive the politic and 
economic dynamics into untenable states.
 
There is a big difference between “failed us” and disagreeing with a particular approach. We’re dealing with a complex 
system and each action has consequences. Despite the complexity the economy generally manages to self-correct but can 
go out of kilter at times. It’s too complex for a simple fix which is why keeping it going until it can get into 
sustainable state seems to be the best, perhaps only, option. (http://rmf.vc/?n=OFI).
 
The lesson of the depression is that there is no magic – you first need to keep the economy running while waiting for 
generative opportunity. An accidental byproduct of WW-II were new technologies and funding for education that acted as 
a stimulus package by creating opportunity. The interstate (defense) highway system was another example. As David Reed 
said, printing money doesn’t create wealth but I argue that it can create the opportunity for wealth. It’s about 
liquidity not the money itself. Liquidity helps us take advantage of generative opportunities.
 
Money itself is a complex and often counter-intuitive concept – it’s not a commodity like gold. The use of gold as a 
monetary instrument can be considered to be a counter-balance to non-transparency in determining the value of a 
currency but at the cost of limiting it to an arbitrary valuation.
 
My simplistic way of thinking of the banks is that they are placing bets and that got a bit out of hand. There is some 
Brownian motion in the market and if you go below zero you’re out of the game and can’t get back in. The bailout money 
got them back in. I do agree with that in that the bankers act as if they deserve the reward instead of being 
participants in a larger process but that’s a separate issue. Well not entirely separate since their hubris was a major 
factor in suspending disbelief and just assuming the market will reward them.
 
It’s not as simple as whether GM should’ve died or lived but how to manage the impact. European economies seem to be 
far more concerned with such issues than the US. We’ve given some parts of GM a chance to survive and they may not but 
we’re unwinding a very large all-or-nothing bet.
 
As to health care – another very complex topic. I don’t have simple answers but when we’re confronted by a mindset that 
wants to keep government’s hands off Medicaid how do you have a reasoned discussion? What are alternative proposals 
that could be achieved?
 
All this said, much of our willingness to take risks and invest in the future is premised on psychology. We tend to 
look for confirmation and major positive or negative events give credibility to the illusion that we have more control 
than we really do and also confirm our worst fears. Perhaps leadership is indeed more about managing our expectations 
than the details of policy. Yet details can matter …
 
For now I’m focusing my own 1000x leverage by trying to unlock our capacity to communicate.
 
From: David Farber [mailto:dave () farber net] 
Sent: Monday, January 04, 2010 12:05
To: ip
Subject: [IP] Re: Mythbusting the Obama Magic
 
 
 
Begin forwarded message:
 
From: "Jonathan S. Shapiro" <shap () eros-os org>
Date: January 3, 2010 11:34:10 PM EST
To: dave () farber net
Cc: ip <ip () v2 listbox com>
Subject: Re: [IP] Re: Mythbusting the Obama Magic
 
On Sun, Jan 3, 2010 at 8:11 PM, David Farber <dave () farber net> wrote:
From: "David P. Reed" <dpreed () reed com>
Date: January 3, 2010 9:35:27 PM EST
To: dave () farber net
Cc: ip <ip () v2 listbox com>
Subject: Re: [IP] Mythbusting the Obama Magic

So I have to admit that I find the idea that Obama has "failed us" to be the kind of sad commentary on Amercian 
thinking that fits in with the idea that 70% of Americans don't know where Myanmar is.   Obama is probably as "expert" 
as those 70% on about 99% of the questions that concern Americans greatly.
 
This is not the sense in which Obama has failed us.
 
Even allowing for the interferences of war and the economy, Obama has clearly failed to deliver on many of his key 
campaign promises. This doesn't really surprise me, and it shouldn't surprise any of you. It is the inevitable pattern 
of politics.
 
Where Obama has failed us is in fiscal irresponsibility. In health care, it appears to me that (a) we got none of what 
we needed, (b) we're about to pay for a lot of stuff that won't help, and (c) we would have been much better off 
leaving the status quo untouched. I'm strongly in favor of a comprehensive national health care system. That isn't what 
we got.
 
In fixing the economy, we got *enormous* Federal expenses on things that won't ultimately do us any good, or worse, 
merely put off the inevitable. GM should have died -- and will, only now you and I will pay more. One can debate 
whether personal mortgages should have been bailed out by the government. But *if* you decide to bail out mortgages, 
you need to do something more than delay the inevitable for three to six months while amplifying the pain and the debt 
level of the people who can't afford their homes. It was perfectly plain that mortgage adjustments that did not write 
down principal simply could not work. Why did we throw *billions* of dollars at non-working solutions? The banks came 
out winners, but what about the rest of us?
 
The democrats under Obama have built the largest, least effective, and most poorly invested debt hole in the history of 
modern civilization, pushed every last one of us into that hole, filled the hole with national debt, and then claimed a 
victory. We will spend more money, time, effort, and pain recovering from the "fix" than we would have by simply 
letting the mortgage market collapse and rebuilding.
 
THAT is how Obama failed us.
 
 
Jonathan
 
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