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Economics Food Fight

Matt Taibbi

Finally we have something fun to talk about. This could save us from wallowing in the horrors of Obama’s health insurance company bailout bill all weekend long. Matt Taibbi’s latest piece came out in Rolling Stone weeks ago, but was only available to subscribers until recently. Suddenly there is a fascinating back and forth going on between Taibbi and Obama apologist Tim Fernholtz at American Prospect. Fernholz nitpicked Taibbi’s article in a much-discussed critique. Then Felix Salmon stepped in to add his two cents to war of words. Then, Taibbi put his own response to Fernholz up on his blog. And finally, the latest: Fernholz has a new response to Taibbi’s response and he includes a couple of digs at Salmon too!

Here are links to all the relevant articles with some highlights:

Taibbi’s original RS story: Obama’s Big Sellout

Taibbi’s main argument is that Bob Rubin and people closely connected with him are running Obama’s economic policy–ensuring that deregulation and free-trade will continue to be the order of the day, rather than efforts to control an out-of-control Wall Street.

It is bad enough that one of Bob Rubin’s former protégés from the Clinton years, the New York Fed chief Geithner, is intimately involved in the negotiations, which unsurprisingly leave the Federal Reserve massively exposed to future Citi losses. But the real stunner comes only hours after the bailout deal is struck, when the Obama transition team makes a cheerful announcement: Timothy Geithner is going to be Barack Obama’s Treasury secretary!

Geithner, in other words, is hired to head the U.S. Treasury by an executive from Citigroup — Michael Froman — before the ink is even dry on a massive government giveaway to Citigroup that Geithner himself was instrumental in delivering. In the annals of brazen political swindles, this one has to go in the all-time Fuck-the-Optics Hall of Fame.

Wall Street loved the Citi bailout and the Geithner nomination so much that the Dow immediately posted its biggest two-day jump since 1987, rising 11.8 percent. Citi shares jumped 58 percent in a single day, and JP Morgan Chase, Merrill Lynch and Morgan Stanley soared more than 20 percent, as Wall Street embraced the news that the government’s bailout generosity would not die with George W. Bush and Hank Paulson.

Fernholz’s critique: The Errors of Matt Taibbi

Matt Taibbi has done it again — written a nightmare of a story for Rolling Stone on Obama’s economic sell-out of his campaign. The piece is a factual mess, a conspiracy theorist’s dream, doesn’t even indict Obama for his real failures (which I’ll discuss in a post later today) and of course invokes the cold hands of Bob Rubin like a bogeyman at every turn. This is pernicious for a lot of journalistic reasons, but politically it’s bad for progressives beacuse conspiracy theories stand in the way of good policy analysis and good activism, replacing them with apathy and fear.

Salmon’s critique of Fernholtz’s critique: Fernholtz vs. Taibbi

Tim Fernholz’s intemperate attack on Matt Taibbi and his latest article is getting a lot of attention in the Twittersphere. It turns out that a lot of journalists don’t like Taibbi, and love it when he gets taken down a peg.

But Fernholz’s attack is weaker than it looks at first glance; a lot of it is simply a matter of slant and opinion.

Taibbi’s response to Fernholz: On Obama’s Big Sellout

So I fucked up with that line — “a former Clinton diplomat” — and for that I certainly am sorry, among other things because Rolling Stone’s fact-checkers are the most rigorous in the business (much more so than any other newspaper or magazine I’ve worked for) and I think actually this was my error and not theirs, a late-stage mixup near press time.

Now, that said, it was indeed Bob Rubin’s son Jamie who worked with Michael Froman in the Obama transition team. Had it not been Bob Rubin’s son, that would certainly have qualified as a serious error, because then we’d be making an argument based upon a factual error.

But the basic argument of the article was that an enormous number of people with ties to Bob Rubin and/or other Wall Street insiders had assumed positions of responsibility in the Obama transition and White House. And Jamie Rubin is Bob Rubin’s son, and he was a headhunter for Obama’s economic hires from the first days of the transition. So the meaning here is really not significantly different. The fact that this heads the Prospect’s list of complaints says a lot about the substance of this criticism.

Fernholz’s response to Taibbi’s response and Salmon’s critique of his critique of Taibbi: Lighting Round

So yesterday’s post on Matt Taibbi’s latest in Rolling Stone got a bit more attention than I had anticipated, including a response from Felix Salmon that I thought was worth addressing. Salmon defends Taibbi — I’d accuse him of some logrolling in our time thanks to his appearance in the piece, but Salmon is better than that — but it’s not a very strong defense….

Here’s my point: Taibbi has written an article arguing that Obama has sold out his campaign-era economic populism by surrounding himself with Bob Rubin’s lackeys and giving away the farm to the bankers — “one of the most dramatic political about-faces in our history.” Only it turns out, though, that many of the Rubinites he identifies don’t work on the things he says they work on, or don’t take the positions he applies to them, or aren’t as influential as he thinks they are. The people he says were “banished” from Obama’s inner circle, like Austan Goolsbee, weren’t. He manages not to mention any of the populist decisions Obama has made.

And Andrew Leonard at Salon is threatening to get involved–he sounds like another Obama apologist.

Is it my imagination, or does the attribution “spent 12 years as an executive at Goldman Sachs” now carry with it the stain of the scarlet letter? Nothing more need be said.

I will return to this theme later today when I tackle Matt Taibbi’s Rolling Stone assault on President Barack Obama but let’s note here for the record that this is yet another case of the White House proposing a sensible piece of regulatory reform — anything that quacks like a financial services banking duck should be regulated like a financial services banking duck — that has been watered down by Congress.

Back and forth–who will be heard from next and will they come to blows?


UPDATE I:

Here is the promised attack on Taibbi by Andrew Leonard: Matt Taibbi goes Obama scalp hunting

And, another voice pipes up from the peanut gallery, Big Media Matt, king of the apologists, Blame Obama First h/t MABlue


UPDATE II:

Salmon returns Leonard’s serve: Don’t Ask Taibbi to be Krugman

But where does Salmon get the idea that we have a “left-leaning government now?” What is he smoking?

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Friday: Krugman harshes Obama’s mellow

The Shrill One offers some advice to Obama in the Jan. 22 edition of Rolling Stone, available to us 6 days in advance through the miracle of technology.  It remains to be seen whether PEBO will actually take him up on any of this.  After all, Krugman had his chance to speak to Obama when he gave marching orders to the other members of the so-called “liberal” press and Krugman chose not to attend.  (But Naomi Wolf was probably there!)

Krugman offers the same liberal, FDR type solutions that were engaged for the last Depression soiree.  You know, nationalizing the banks, demanding that taxpayers get something for their money, using federal money to put people back to work, new social safety net programs, yadayadayada.  The Grover Norquists of the country are popping carotids left and right like they always do when Krugman opens his mouth.  Krugman apparently wants to drag the government out of the bathtub and commence rescue breathing right away.  He says that the legacy of the FDR programs caused something called “The Great Compression” where the income disparities between rich and poor were minimized and this lead to one of the most productive periods of American history in terms of growth and innovation.  Frickin’ liberal.  Doesn’t he know that relentless hardship builds character and that we’re all post partisan now?   All he wants to do is protect labor, improve wages, strengthen the social safety net.   But we always hear this same kind of thing from Krugman.

What I *hadn’t* heard from Krugman and what strikes me as a damn good idea is his proposal for a Truth and Reconciliation Commission:

There is, however, one area where I feel the need to break discipline. I’m an economist, but I’m also an American citizen — and like many citizens, I spent the past eight years watching in horror as the Bush administration betrayed the nation’s ideals. And I don’t believe we can put those terrible years behind us unless we have a full accounting of what really happened. I know that most of the inside-the-Beltway crowd is urging you to let bygones be bygones, just as they urged Bill Clinton to let the truth about scandals from the Reagan-Bush years, in particular the Iran-Contra affair, remain hidden. But we know how that turned out: The same people who abused power in the name of national security 20 years ago returned as part of the team that, under the second George Bush, did it all over again, on a much larger scale. It was an object lesson in the truth of George Santayana’s dictum: Those who refuse to learn from the past are condemned to repeat it.

That’s why this time we need a full accounting. Not a witch hunt, maybe not even prosecutions, but something like the Truth and Reconciliation Commission that helped South Africa come to terms with what happened under apartheid. We need to know how America ended up fighting a war to eliminate nonexistent weapons, how torture became a routine instrument of U.S. policy, how the Justice Department became an instrument of political persecution, how brazen corruption flourished not only in Iraq, but throughout Congress and the administration. We know that these evils were not, whatever the apologists say, the result of honest error or a few bad apples: The White House created a climate in which abuse became commonplace, and in many cases probably took the lead in instigating these abuses. But it’s not enough to leave this reality in the realm of things “everybody knows” — because soon enough they’ll be denied or forgotten, and the cycle of abuse will begin again. The whole sordid tale needs to be brought out into the sunlight.

It’s probably best if Congress takes the lead in investigations of the Bush years, but your administration can do its part, both by not using its influence to discourage the investigations and by bringing an end to the Bush administration’s stonewalling. Let Congress have access to records and witnesses, and let the truth be told.

“Full faith and credit of the United States” needs to mean something to the world or it will stop lending to us and trade in our dollars.  When there is no accountability, there can be no trust.  And with no trust, there can be no negotiation in good faith.  What we end up with are nations and people who will be constantly looking over their shoulder worried that they’re about to be stabbed in the back.  I suspect the reasons that the banks aren’t lending to each other or anyone else right now is because it takes a cheating bastard to know one.  In this kind of environment, the worms that lie in the mud have to be forced to hatch out so we can see what we’re dealing with, learn from it and make sure the people responsible never have a chance to operate in positions of power ever again.  Their lawless behavior is going to result in chaos and hardship for many citizens for years to come.  There has to be accountability or a country of laws mean nothing and our money and our word become worthless.

Of course, we’re talking about Obama here so don’t hold your breath.  The guy got the nomination by theft.  (Don’t you stupid Obots go off about how Hillary ran a bad campaign.  Save your breath.  We know who actually ran a bad campaign because he required the RBC hearing to overturn primary results in order to barely eek out a win.  Deal with it, guys.  You elected the weakest link.)  The country was so desperate to get rid of Republicans that they had no alternative but to vote for Obama.  Now, they *expect* Obama to deliver.  There is no use trying to dampen expectations.  Even the least he can do is going to be a monumental challenge for one so unaccustomed to the real business of governing.  But he must do it.  We know it is beyond his capabilities right now but he really doesn’t have any choice and we expect him to burn himself out trying.  He wanted this job, he bought off enough superdelegates to get it, he destroyed a more worthy candidate’s career by waving around his penis and won it.  But you can’t govern using a penis and accusations of racism.  That’s going to get old really fast when an ever increasing number of people are losing their jobs and health insurance.  He needs to implement a Truth and Reconciliation Commission as quickly as possible and ferret out the Easter Eggs left in the executive branch by his predecessor and his Monica Goodling type personnel managers.  Give us the satisfaction of nailing the bastards.

Yeah, he’ll probably dance with the ones that brung him, the very same people who need to be brought to account.  But you can be damn sure I’ll be out here every day of the next four years stirring up enough noise about it.  My expectations are high.  There’s no handicap for a beginner.  He wanted the job.  He’s got it.

Now deliver.