Obama: One Term President

Obama: One Term President
One wonders: What is the relationship between the driving habits of the Chinese and the meltdown in global financial markets? The former issue has baffled me since I first arrived in China almost six years ago; the latter, since first I read reports of troubles in the credit market in The Economist and The Financial Times during the late spring and summer months of 2007. As an avid but informal student of culture who has traveled in many countries -- and previously lived in Africa, England, Germany, Israel, and Sweden -- I was shocked and appalled by Chinese drivers' complete disregard for human life. As a teacher of economics, I was stunned and increasingly angered by the behavior of mindless lemmings on Wall Street and in Washington, D.C. who marched the global economy off a cliff.

Speaking of the drivers, I've been assaulted by motorcycle riders three times, by car drivers six times. Four of the six car assaults were, quite literally, life threatening. Another, down in Fujian, involved a minivan driver on a pedestrian walkway. From a dead stop, he accelerated as I walked with students beside his van. His left rear-view mirror knocked me into stout, high shrubs, which immediately bounced me back up. I had just time enough to punch and kick his vehicle before walking into a clear area from where I motioned him to come to me when he jammed on his brakes to exit the van. Yes, I was incensed, wanted to fight: I had already seen, over two years in Shanghai, mothers and infants all but run over by bus or van drivers who ignored traffic wardens or stop signs. Yet the most irksome incident occurred as I walked back with a friend and his two Chinese-American daughters from fetching ice-cream for the girls, aged eight and six. It happened at the intersection of Bi Yun Lu and Lan Tian Lu here in Pu Dong. We walked with the light in the painted pedestrian crosswalk. We were two-thirds the way across the four-lane road when a taxi came around the corner -- and sped right at us. He could have gone around us into the right lane of Bi Yun heading East. The driver slowed to a crawl to navigate between our group and the cement curb of the median strip. My friend yelled "Hey!" but I leant over to give the taxi's trunk a smack sounding somewhat like a gunshot or firecracker. The driver tapped his breaks as I raced around to kick his door into his face as he emerged. (To quote one of my martial arts instructors, a former U.S. Navy SEAL who served in Vietnam: "Technique is secondary only to the original ferocity of attack.") He sped off.

Now don't get me wrong. I love living in Shanghai, else I would not. Yes, there is a beautiful woman involved (three-plus years and counting), as well as excellent friends both Chinese and ex-pat. Plus I cannot even begin to describe how fond I am of The Poets and Shakespeare Players from the university where I taught the first year in China. They are simply the finest, funnest and most creative young lasses and lads China has to offer -- they are the future. We hold reunions as often as possible; they treated me to dinner last Christmas Eve. Yet I cannot explain the difference between their excellent, civilized manners and those of the murderous, loutish Chinese drivers. Even my Poets and Shakespeareans simply sigh in resignation at Chinese driving habits. One hears a great deal about "5,000 years of continuous civilization" -- but it is nowhere apparent on the streets of Shanghai or Beijing or other major cities. Pity that; it gives the lie to all that nonsensical talk about “civilization.”

As for the cretinous lemmings on Wall Street and in D.C., they are an even greater scandal. The crises in the credit and related financial markets have MADE IN AMERICA stamped all over them. Iceland is a bankrupt nation due to its banks’ investments in toxic U.S. financial instruments; other nations teeter on the brink of insolvency – including the U.S.A., where many of the major banks believed “too big to fail” are insolvent if one marks their assets to market, as should be done in reality as opposed to imaginative accountancy stratagems created to avoid reality. It is just for this reason that the much bally-hoed “stress tests” were a joke, a fraud and -- to an honest mind not blinded by ideology or the corruption of crony capitalism -- a crime. (But don’t take my word for this; consult others here http://www.ft.com/cms/s/0/ 8bacf162-4a08-11de-8e7e-00144feabdc0.html and here http://voices.washingtonpost.com/ezra-klein/2009/05/this_is_what_regulat... _captur.html. For a detailed, riveting analysis, read Willem Buiter’s Lessons from the North Atlantic Financial Crisis; it’s only 81 pages.

The supposed “masters of the universe,” those “wizards of Wall Street,” were and are guilty of group-think, of bone herd mentality. They believed the “Morgan Mafia” that created CDO’s (collateralized debt obligations) had eliminated risk in financial markets. They believed CDS’s (credit default saps) – the wildest form of unsecured speculation – were legitimate financial instruments. They did not listen to economists and investors (Warren Buffet, Joseph Stiglitz, Paul Krugman, Noriel Roubini, Dean Baker, Nassim Taleb, others) who warned of dangers. They believed their impossibly complex, fantastical computer models despite Taleb’s warnings regarding such. Then, like the lemmings and criminals they are, they joined hands and blithely walked the global economy off the proverbial cliff. Their addiction to profits at any cost proved to be simply, entirely irrational. They acted like sex or drug addicts.

And the lunatics are still in charge of the asylum. Timid Timothy Geithner is a proven tax scofflaw, a failed regulator -- as he admitted before Congress -- as well as yet another tool or fool for Wall Street. For example, as reported in The New York Times, legislation he recently sent to Congress was written by Davis, Polk and Wardwell, a law firm representing and lobbying for the banks. (The link is here: http://www.nytimes.com/2009/04/27/business/
27geithner.html?pagewanted=7&sq=Geithner&st=cse&scp=2). This simply is crony capitalism – in other words, corruption – at the very highest levels of government.

Geithner’s plan for disposing of toxic debt still on banks’ books calls for inflating yet another speculative bubble -- with the majority of profits privatized, the majority of risks socialized, no Plan B. Geithner is simply and solely another cretinous lemming. His strategic plan has done and will do nothing – repeat, nothing – to boost expectations or confidence over the long term. (Ben Bernanke can be credited with walking the U.S. financial system back from the brink, but at the future risk of very high inflation. More ominously, he has invented new programs for lending huge sums to banks and other financial entities, programs that are entirely under the radar of oversight and supervision by elected officials or regulatory agencies.)

Lawrence Summers is, like Geithner, a protégé of Robert Rubin. Rubin was Secretary of the Treasury under Bill Clinton. Rubin was the chief mover – with Phil Gramm, the mastermind -- behind deregulation of the banking system. Summers was brought from Goldman Sachs to the Treasury Department by Rubin, then Summers replaced Rubin as Secretary when Rubin took a $20-million per year job at Citigroup. Summers, with Gary Gensler, another Goldman Sachs crony Rubin brought aboard, aggressively lobbied Congress not to regulate credit default swaps. (Another chief lobbyist for not regulating CDS’s was Alan Greenspan, who has been revealed for the idiot savant he is: Good with numbers but brain dead due to ideology.) The credit default swaps are at the heart of the crises in the credit and financial markets. They were responsible for the implosion of AIG (American Insurance Group), which so far has received some $162 billion in bailout funds from the government – that is, from U.S. taxpayers, their children and probably their grandchildren.

So there you have it: Of the five primary enablers of the deregulation that caused the meltdown in credit and related financial markets, thus leading to the current global recession, two of them -- Rubin, Summers -- are top economic advisors to President Obama, who chose Gary Gensler to head the Commodity Futures Trading Commission. Little Timmy Geithner, tool of Wall Street and self-confessed failed regulator (and, don’t forget, tax scofflaw), presides over Treasury. In other words, the lunatics are still running the asylum: the cretinous lemmings who led us over the cliff are still in control.

Lemmings, all. The lot of them ought to be taken out and, if not hanged for treason and sabotage, at least exiled to frozen tundra where they can do no further harm. (Harsh? Well, how many lives and nations do you want them to destroy?)

The fact is that the markets failed. “Market failure” or “externality” is a concept enshrined in even the most conservative Neo-Classical economics textbook. A “negative externality” is defined as follows in Principles of Microeconomics (Rich Bernanke 2002, 278): external cost (or negative externality) a cost of an activity that falls on people other than those who pursue the activity. What is most galling is that the negative externality was caused by management and workers in financial markets; that is, entrepreneurs, managers and labor. Entrepreneurship and labor are two of the four “factors of production” in all economics textbooks, Keynesian or Neo-Classical. This “human capital” includes, in this case, regulators (like little Timmy Geithner), the rating agencies (which were, of course, ready and willing accomplices to their paymasters, an example of crony capitalism at its most egregious), mortgage agencies and bankers, among others including the U.S. Congress – none of whom heeded informed voices calling for oversight and warning of imminent disaster. It would be hard to find or even imagine a more damning condemnation of laissez-faire free markets unconstrained by regulations and the rule of law. Alan Greenspan had all the powers he needed to nip these crises in the bud, (link is here: www.federalreserve.com.) But he did not because he was entirely blinded by his irrational belief in free markets. Cretinous. We won’t even go into the other lemmings: Gene Sperling, Greg Baer, Linda Robertson, et. al., who were lesser figures, foot soldiers – smaller lemmings -- in the war on regulation and the rules of law.

Further, Barack Obama is chained to his economic advisors, who were and are tools and pawns of Wall Street. This makes President Obama a stiff, a stooge, a tool, a slave owned by Wall Street. I use that pejorative intentionally, to wake up or alert the President. There is another, even more demeaning term for Obama’s enslavement to Wall Street (which supplied, thanks to Robert Rubin, at least 10% of Obama’s campaign expenses). But my mother was furious I used it. So I changed it to “slave”. You can suss it out.

Note that no one can accuse me of racism: My closest friend is Alexander Korletey Tettah, who was my second in command when I served with the U.S. Peace Corps in Ghana for 27 months, 1995-1997. His nickname is “Jehrawn.” He saved my life when a green mamba was poised some three inches from my right boot. We were bushwhacking up a very steep trail at the time, way off the beaten track, miles from a hospital. It was my turn in the lead, clearing bush. I stopped to warn Alex of a thick band of army ants just ahead. Alex replied in a voice of absolute command he had never used before and has never used since: “Uncle Ned. Don’t move.” From an informal survival guide circulating in West Africa at the time: “If you are struck by the green mamba, sit down and light a cigarette. You will not have time to finish it.”

Almost a year later, Alex’s sister, the exquisite Vida (now dead), and one brother, Ransford, arrived at my digs 2245 hours: “Uncle Ned, Jehrawn is very sick. Can you help?”

They handed me a prescription written by a doctor at the local hospital: 115,000 cedis - at the time, some $65 - for a cerebro-spinal menningitis inoculation and related medicines. That sum was more than Jehrawn and the four wage earners in his family would make in two weeks. Certainly they did not have that amount to spare; all moneys went to school fees and food. So I conscripted a pickup truck, we piled in, then I climbed over the wall of the closest pharmacist's compound to beat on his door at 2315: “I need medicines!”

When Jehrawn's family and I arrived at Otua Hospital in Odumasi, Manya Krobo District, Eastern Region, just before midnight, the nurse grabbed the inoculation and other medicines and emptied them into Jehrawn - through new syringes I’d purchased. No way was he going to be jabbed with a used needle. He was stone cold to my touch, deep in coma.

Early next morning I went back to call on the chief of medicine, a smiling young Ghanaian who trained in England. Per the wonderful Ghanaian custom of hospitality, he immediately called for sodas for me, Vida and Ransford. The doctor laughed and laughed because, he said, he was delighted to hear me refer to Jehrawn as my “brother." That young Doctor is still a hero to me because he saved Jehrawn's life -- and because he told me the truth.

I asked the Doctor, "What would happen to Jehrawn if I had not arrived with medicines last night?"

"He would be allowed to die."

"But why?" I demanded.

The Doctor explained. I will remember his words til the day I die: "Your brother is a black man, so I will tell you. My friend, we are in Africa. Medicine is very expensive. We practice a type of financial triage. If you cannot pay, you will die. Your brother is very, very lucky." He informed me that the single greatest cost -- on top of the spinal tap, the hospital bed, ongoing care "if he survives" -- would be medications. I agreed to pay.

Jehrawn recovered. He was in a coma for almost five days, during which the CSM fever burned twenty-five pounds off him. When he came to, his left leg was, he said, "dead," and he had lost hearing in his left ear. He stumped around on a cane for a month or so. But just three months later he and I guided tourists on a traverse of Krobo Mountain, the sacred, ancestral home of the Krobo tribe and clans amongst whom I lived.

During that trek, from under a rock by the side of the trail, a green mamba streaked through his legs and over my left boot. My crew of sixteen men was working below us at the southernmost spur of Krobo Mt., building an ecotourism facility and tree nursery. They did backbreaking labor for 3,500 cedis -- just under $2 -- per day. Zeke Obu, my foreman, told me they were very glad to have steady employment at "propah" pay almost double the national average of $1 daily. Jehrawn, his wife and daughter – my heart’s delight, sweet Anne Marie -- now live in Davis, California. We are planning on moving back to Ghana to start businesses, contribute to development.

So: Wake up, Barack Mr. President Obama: The crises are yours from your inauguration. But your economic advisors are the same cretins who put us in this situation. They have showered their cronies on Wall Street with trillions of dollars. They have done little to nothing to address the gravest threats to economic recovery -- foreclosures and unemployment. Foreclosures on American mortgages are the root cause of both crises, as The Economist and The Financial Times have reported repeatedly. Foreclosures are at a record high and are projected to increase throughout 2009 and into 2010. As long as such toxic debt enters the financial system, there is no hope of economic recovery. Increasing levels of unemployment will add to the rate of foreclosures. It is as simple as that. Yet your economic advisors shower all their attention on Wall Street – the source of the meltdowns. They protect the doctors who prescribed a regimen of medications for an otherwise healthy patient who consequently died. They ignored all warnings and advice.

Thus, Mr. President, failure and crony capitalism might well be your legacy. Hence, if you do not change course by sacking your chief financial advisors and addressing the root causes of the crises, you will be a one-term executive. And I, for one, will have no reason to debate your failures.

Yet perhaps I digress: What can possibly be the cause of such irrational behavior among Wall Street players and Chinese drivers? Their actions prove the opposite of economic theory.

Well, some years ago I was privy to a conversation among the Ladies of our clan. My youngest sister and my sister-in-law were in the living room, where my mother, our matriarch, held court as she knitted some nameless thing. My sister and sister-in-law chatted about the differences among their children, who were born within months of each other, girls first, then boys, all four of them less than three years of age. My terribly refined British sister-in-law was mystified by the differences between her male and female children at such an early age. So, too, was my youngest sister.

My Mother, however, was not. She said, “I know.” After more than a few moments of speculation – as I hung quietly in the kitchen – my mother said, “Testosterone poisoning.” We howled with laughter.

Me Mum was prescient. Traders and wheeler-dealers on Wall Street and elsewhere were oblivious to their testosterone levels, the engine – cause and effect – that drives them. In other words, irrational behavior. There is a great deal of evidence to support this conclusion. See the following links here:

http://www.bloomberg.com/apps/news?pid=20601124&sid=akWXksOOzQIo&refer=h...

And here:

http://online.wsj.com/article/SB120846072638623669.html

And here:

http://www.scientificamerican.com/blog/60-second-science/post.cfm?id=is-...

And here:

http://www.bloomberg.com/apps/news?pid=20601124&sid=akWXksOOzQIo&refer=h...

A Time magazine list of 25 people to blame for the financial crises does not include a female. (www.time.com/time/specials/packages/article/0,28804,1877351_ 1877350, 00.html). I have not been assaulted by a female driver in Shanghai. To my empirical mind, the case is closed: Testosterone poisoning.

This verdict in no way absolves those responsible. Rather, it points to the need for stronger regulatory supervision, to prevent the lemmings from repeatedly indulging in irrational behavior, in their mistakes, their crimes, their addiction. The problem is, however, that the lunatics are still running the asylum. Their chief enabler – their Commander-in-Chief -- is Barack Hussein Obama. Who, as a result, most likely will be a one-term president. He will then join the cretinous lemmings in their legacy of shame, failure, economic sabotage and treason.

Mr. President, wake up: It’s the economy, stupid!

We your supporters wish you well, wish you two terms. But you must lead, not merely speechify. Get tough. Spend political capital; bang heads. Play hardball. Or join the losers in the Cretins’ Club.

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Ned Boudreau teaches Economics in the International Baccalaureate Diploma Program at Shanghai Pinghe School in Shanghai, China. He holds a M.Sc. degree in Development Economics.

Views expressed on this page are those of the authors and not necessarily those of Campaign for America's Future or Institute for America's Future