FLASH: Volcker Backs Obama

20 Comments

1. 

   idredit on February 2, 2008 at 9:56 am

   he’s racking up the big names. Obama transcends. Add President Dwight Eisenhower’s grand daughter.

   In the Washingpost via TPM

   Why I’m Backing Obama
   By Susan Eisenhower

   “Forty-seven years ago, my grandfather Dwight D. Eisenhower bid farewell to a nation he had served for more than five decades. In his televised address, Ike famously coined the term “military-industrial complex,” and he offered advice that is still relevant today. “As we peer into society’s future,” he said, we “must avoid the impulse to live only for today, plundering, for our own ease and convenience, the precious resources of tomorrow. We cannot mortgage the material assets of our grandchildren without risking the loss also of their political and spiritual heritage. We want democracy to survive for all generations to come, not to become the insolvent phantom of tomorrow.”[.]

   I am convinced that Barack Obama is the one presidential candidate today who can encourage ordinary Americans to stand straight again; he is a man who can salve our national wounds and both inspire and pursue genuine bipartisan cooperation. Just as important, Obama can assure the world and Americans that this great nation’s impulses are still free, open, fair and broad-minded.[.]
   The last time the United States had an open election was 1952. My grandfather was pursued by both political parties and eventually became the Republican nominee. Despite being a charismatic war hero, he did not have an easy ride to the nomination. He went on to win the presidency — with the indispensable help of a “Democrats for Eisenhower” movement. These crossover voters were attracted by his pledge to bring change to Washington and by the prospect that he would unify the nation.

   It is in this great tradition of crossover voters that I support Barack Obama’s candidacy for president. If the Democratic Party chooses Obama as its candidate, this lifelong Republican will work to get him elected and encourage him to seek strategic solutions to meet America’s greatest challenges. To be successful, our president will need bipartisan help.[.]

   Where’s Al Gore? Speak man. speak.

   • 

     AP on February 2, 2008 at 10:38 am

     Can you believe it? I was just blown away reading her endorsement this morning. There just seems to be this groundswell for him–I just hope he has time.

     • 

       idredit on February 2, 2008 at 12:50 pm

       NEWSWEEK’s take

       Barack + GOP = `Obamacans’

       Some prominent Republicans have caught Obama fever.

       Eisenhower is one of a small but symbolically powerful group of what Obama recently called “Obamacans”–disaffected Republicans who have drifted away from their party just as Eisenhower Democrats did and, more recently, Reagan Democrats in the 1980s. They include lifelong Republican Tricia Moseley, a former staffer for the late Sen. Strom Thurmond, the one-time segregationist from South Carolina. Now a high-school teacher, Moseley says she was attracted to Obama’s positions on education and the economy.[.]

       Even if Republicans don’t convert in more significant numbers, the friendly outreach may blunt the ferocity of GOP attacks. One senior aide to John McCain has already said he’s reluctant to attack Obama: last year, McCain’s adman Mark McKinnon wrote an internal memo promising not to tape ads against the Illinois Democrat if he becomes the nominee.          

   • 

     shergald on February 2, 2008 at 11:02 am

     An Al Gore endorsement would be the ultimate stab in the back to the Clintons. He is not Ted Kennedy. Best we can hope for is that he remains noncommittal, poised to become part of any administration that would further his global warming campaign.

     • 

       idredit on February 2, 2008 at 12:18 pm

       imo, it won’t be a stab in the back for Gore to endorse Obama. There is no love left between the Clintons and Gore.

       2000 came, went with silence as the election was stolen;  and Clintons went on to embrace the Bush clan. Bush endorsed Hillary, is comfortable with leaving her the safe-keeping of his legacy.

       I’ll remember.  Hope Gore does.

       Gore is unlikely to endorse before super duper Tuesday.

       • 

         Salunga on February 2, 2008 at 8:59 pm

            Gore and Clinton got into it after the 2000 elections. I remember talk of a heated argument over the Monica Lewinsky scandal. With clinton pointing out that he was not the robot who lost three debates with the dimwit GW. They already hate each other.
            Gore would think twice about endorsing another campaign like he did Dean’s back in 2004. It immediately preceded Dean’s collapse. A coincidence but may be done with primary endorsements.
            Volker’s indorsement brings back a lot of bad memories from the last oil shock. 21% interest rates that was a fucker of a recession. But we had 15% inflation then too. Ultimately Reagan “borrowing” 2 trillion dollars over eight years added to the collapse of oil prices revived the economy. The collapse being due to the most severe recession since the great depression. A recession that holds that dubious distinction to this day. Volker’s name gives me chills. His name brings a flood of bad memories. Our current economic crisis is scary enough.

2. 

   fairleft on February 2, 2008 at 10:48 am

   The one who jacked up interest rates so high just prior to the 1980 election that he helped throw the election to Reagan? The one who caused the worst recession since the Great Depression, in service to the banks and financiers who think inflation is bad and unemployment and low wages are good?

   Yes, another Reagan Revolutionary has backed Obama. You may not want to celebrate, you may instead want to think about what it means.

   • 

     shergald on February 2, 2008 at 11:06 am

     It was Volcker who established the principle of using fed rates to combat inflation. People who suffer the worst damage from inflation are the poor and elderly on fixed incomes. That principle is the one now used by all Fed chairmans to keep inflation under wraps.

     Yes, it was tough medicine to bring double-digit inflation down. I’m sure that it was not pleasant for Volcker, unlike Reagan, who claimed that all of the families that went homeless during that period were just mental patients who preferred street life.

     • 

       fairleft on February 2, 2008 at 11:53 am

       to accomplish the same anti-inflation goal without causing a recession.

       But that was back in economic policy pre-history (before economics was taken over by Milton Friedman’s acolytes). The only broadly (to all levels of income) successful economics in the future will be a renewal of modified Keynesian economics. You can’t use unemployment and low wages to battle inflation, but that’s the only option in Obama’s and Volcker’s and the DLC’s (but hopefully not Hillary’s) WallStreet/neolibertarian economics.

       • 

         fairleft on February 2, 2008 at 12:18 pm

         More on Volcker & Reagan’s pro-poverty, anti-inflation record here:

         http://krugman.blogs.nytimes.com/2008/01/20/

       • 

         shergald on February 2, 2008 at 12:47 pm

         You probably know more about this topic than I do. But while I am catching up a little, this review of the Nixon measures turned up:

         In 1971, the U.S. was also in the process of leaving the gold standard, which was intended to allow the value of the U.S. dollar to fall.  Compounding the situation were such events as Fed Chairman Arthur Burns and the Committee on Interest and Dividends (part of the controls apparatus) strenuously opposing banks attempting to raise the U.S. prime rate from 6% to 6.25% in February 1973.  Inflation rates were below 4% at the start of 1973, but reached 9% by the start of 1974, which would have made the real prime rate a negative 3%.  At the same time, interest rates were going up in foreign countries, putting enormous pressure on the dollar.

         The wage and price controls were mostly dismantled by April, 1974.  By that time, the U.S. inflation rate had reached double digits.

         While there were skeptics in August, 1971, there were a great many who thought “temporary” wage and price controls could cure inflation.  By 1974, this notion was thoroughly discredited, and attention gradually turned toward a monetary approach to inflation.  In a complete reversal, the policy to curb inflation in now thought to be an increase in interest rates rather than an attempt to hold them down.

         Sorry lost the link and the adjoining graph on inflation rates over this period. From what I read, inflation increased after the wage/price control was instituted.

         • 

           idredit on February 2, 2008 at 1:17 pm

           I join others who see Krugman as intellectually dishonest, most likely angling for a job in a Clinton administratgion.  His critique of Obama is most unbalanced.

           Keep the endorsements coming:

           In California, following the lead of LATimes and San Francisco Chronicle  via TPM

           Big Spanish-Language Newspaper Endorses Obama, McCain
           

           a development that could give him increased credibility among Hispanic voters in the crucial California primary. Key quote:

               We need a leader today that can inspire and unite America again around its greatest possibilities. Barack Obama is the right leader for the time. We know that he is not as well known among our community and while he has the support of Maria Elena Durazo, Senator Gil Cedillo and others he comes to the Latino community with less name recognition. Nevertheless, it is Obama who deserves our support.

           And if I hear one more apology from Bill Clinton I’ll be a monkey’s aunt.

           little late Bubba. You’re seen as having used Af-Ams as you would a kleenex.

         • 

           fairleft on February 2, 2008 at 1:26 pm

           over Obama’s or Hillary’s. Since there is no evidence that K’s on the take, and corporate Democrats are by definition.

           Regardless, I think your resort to character assassination shows you’re unable to respond to K’s or my arguments. Volcker’s endorsement is from a decidedly ‘mainstream (i.e., Milton Friedman) economics’ and non-populist source.

         • 

           idredit on February 2, 2008 at 3:51 pm

           there you go, again.

           I would lay it all out..but since you took this road to see my claim that Krugman is intellectually dishonest as

           character assassination; eh?  Krugman has been shilling for Hillary. Will he now seek defamation of character?

           on the critique of Krugman by his peers, how much do you wish to read ?

         • 

           fairleft on February 2, 2008 at 6:27 pm

           So you said Krugman was not being intellectual honest (which a reasonable person would call character assassination), then you hit me with ‘there you go again’ bullshit?

           You have a list of people questioning Krugman’s intellectual honesty? Or a list of mainstream economists questioning his Keynesian economics? I’d be surprised if you had  the first and unsurprised if you had the second, for the obvious reasons.

         • 

           Salunga on February 2, 2008 at 9:02 pm

              Keep in mind we had an oil shock in 1973. An oil boycott from the arab countries for supporting our beloved Israel in the October war.

   • 

     idredit on February 2, 2008 at 12:35 pm

     NewsFlash: smart money is appalled at current injection of liquidity, interest rate cuts that will.lead.to.hyperinflation.  The next Fed chair, 3 years out, will need to raise interest rates to the levels Volcker did. Anyone who recalls late 70s to 80s will know inflation was running in double digits; +16%. Volcker is applauded for getting inflation under control.

     Today, the policies of inflation control and a strong dollar have been thrown under the bus printing money 24/7 to save he banks…

     our current financial meltdown will be laid at the feet of Clinton and Rubin. cross-posted from the front page here, “Not Everything Went Wrong

     In this election, who’ll be blamed for the great credit bubble? Bill, Bob and Al.

     from The Great Credit Unwind of (2007)-2008

         But since President Bill Clinton repealed Glass-Steagall in 1999, the markets have been reconfigured according to an entirely new model, “structured finance”.

         Glass-Steagall was the last of the Depression-era bulwarks against the merging of commercial and investment banks. As a result banking has changed from a culture of “protection” (of deposits) to “risk taking”, which is the securities business. Through “financial innovation” the investment banks created myriad structured debt instruments which they sold through their Enron-like “off balance” sheets operations (SIVs and Conduits) Now, trillions of dollars of these subprime and mortgage-backed bonds—many of which were rated triple A—are held by foreign banks, retirement funds, insurance companies, and hedge funds. They are steadily losing value with every rating’s downgrade.

     BTW, Mr. Whitney is not alone in holding that the repeal of the Glass-Steagall Act has propelled the banks to their demise.

3. 

   fairleft on February 2, 2008 at 1:18 pm

   They were meant to be a 3-6 month policy to get everyone to clear their heads, break the inflation cycle and and stop inflating cuz the other side (labor’s wages/industry’s prices) was inflating. W-p controls are succesful, I think, when not overwhelmed by non-compliance or overwhelming economic realities pushing for inflation. Here’s an excerpt from a mainstream book on Nixon (emphasis added):

   “Having talked until recently about the evils of wage and price controls,” Nixon later wrote, “I knew I had opened myself to the charge that I had either betrayed my own principles or concealed my real intentions.” But Nixon was nothing if not a practical politician, as he made clear in his masterful explanation of his shift. “Philosophically, however, I was still against wage-price controls, even though I was convinced that the objective reality of the economic situation forced me to impose them.”

   Nixon’s speech — despite the preemption of Bonanza — was a great hit. The public felt that the government was coming to its defense against the price gougers. The international speculators had been dealt a deadly blow. During the next evening’s newscasts, 90 percent of the coverage was devoted to Nixon’s new policy. The coverage was favorable. And the Dow Jones Industrial Average registered a 32.9-point gain — the largest one-day increase up to then.

   The Cost of Living Council took up the job of running the controls. After the initial ninety days, the controls were gradually relaxed and the system seemed to be working. But unemployment was not declining, and the administration launched a more expansionary policy. Nixon won reelection in 1972. In the months that followed, inflation began to pick up again in response to a variety of forces — domestic wage-and-price pressures, a synchronized international economic boom, crop failures in the Soviet Union, and increases in the price of oil, even prior to the Arab oil embargo. Nixon, under increasing political pressure from the investigations of the Watergate break-in, reluctantly reimposed a freeze in June 1973. Government officials were now in the business of setting prices and wages. This time, however, it was apparent that the control system was not working. Ranchers stopped shipping their cattle to the market, farmers drowned their chickens, and consumers emptied the shelves of supermarkets. Nixon took some comfort from a side benefit that George Shultz, at the time head of the Office of Management and Budget, identified. “At least,” Shultz told the president, “we have now convinced everyone else of the rightness of our original position that wage-price controls are not the answer.”

   http://www.pbs.org/wgbh/commandingheights/shared/minitextlo/ess_nixongold.html

   Your cite is a usual suspects source who probably learned his/her false history at the foot of some Milton Friedmanite wise man back in college. Such folks’ ideologies must delete inconvenient facts because they cannot compute that w-p controls worked in the short/medium term (which is how they should be used).

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     shergald on February 2, 2008 at 3:08 pm

     Friedman, as a libertarian, was likely against interventions of the kind Nixon imposed. But did he in turn support Fed intervention ala the interest rate adjustments Volcker imposed? Given his support of Reagan, this is likely, yet it is not exactly what one would expect from him.

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       fairleft on February 2, 2008 at 6:23 pm

       Friedman was a monetarist, which basically means intervening in the economy only by the Fed and only to adjust interest rates for the purpose of long-term low, stable inflation. That ideology takes some useful tools away from economic policy makers. Like short-term wage-price controls and short-term Keynesian stimulus such as giving money to people who we know will immediately spend nearly all of it.