Obama's Economics Grade So Far – "Charitable Incomplete"
With President Obama halfway through his first 100 days, CBS' The Early Show gathered a panel of economic experts to grade the president's handling of the financial crisis that has only intensified since he took the oath of office. The verdict? Not too good.
"A charitable incomplete, but in terms of a grade so far, not passing," Steve Forbes, president and CEO of Forbes, Inc., told anchor Harry Smith. "He's done nothing effective to deal with the financial crisis."
Chrystia Freeland, managing editor of the Financial Times, thinks "we haven't seen sufficiently bold action from the government" to combat the financial mess, but she does give Mr. Obama some credit, saying the passage of the $787 billion stimulus package "was actually really huge."
Peter Morici, a University of Maryland economist, said that while the stimulus package "will create a couple million jobs … it is terribly expensive for the impact it will have."
Watch Bill Plante's report and economic roundtable discussion
Morici was particularly critical of Treasury Secretary Timothy Geithner.
"He shows up in town with a terribly vague plan that frankly if a graduate student handed it in, I would tell him to leave the program. I'd tell him to register at the Baltimore Academy for Pastry Chefs."
Since Mr. Obama took office, key financial indicators have taken a beating. The Dow Jones industrials are down 18 percent. And unemployment has risen from 7.2 percent to 8.1 percent, reports CBS News correspondent Bill Plante.
Smith asked the panel what advice they would give President Obama.
Forbes said, "Three quick things: get rid of mark to market which is destroying banks and insurance companies. If he doesn't, this economy's not going to recover. Two, put in road bumps on short-selling like the uptick rule. Three, tell Mr. Bernanke at the Federal Reserve, get on the job and start pumping real money into mortgage-backed securities."
("Mark to market" is an accounting device which assigns value to assets based on their current market price, not potential future value. With the economy doing poorly, Forbes is arguing that mark to market unnecessarily weighs down the balance sheets of banks and insurance companies. The "uptick rule" is a pricing restriction on short-selling that was eliminated in 2007 by the SEC in order to evaluate its effectiveness.)
Freeland suggested President Obama use his "bully pulpit and your very effective communication skills to get a lot more money from Congress for the banks, maybe as much as $1 trillion and use that money once and for all to clean them up."
As for Morici, he said: "Create a bad bank, sweep all the questionable assets off. … At that point, Citigroup looks desirable. It's got 8 percent of the deposits, lots of branches with shiny offices. Fine, you can sell new stock into banks. That way the shareholders aren't rewarded for what's happened. … They get recapitalized. They can pay back their TARP money and we get new management and go forward."
Complete Coverage: Obama At 50 Days
Also, make your predictions about Mr. Obama's approval rating after 100 days and after 1 year.
© 2009 CBS Interactive Inc.. All Rights Reserved. "A charitable incomplete, but in terms of a grade so far, not passing," Steve Forbes, president and CEO of Forbes, Inc., told anchor Harry Smith. "He's done nothing effective to deal with the financial crisis."
Chrystia Freeland, managing editor of the Financial Times, thinks "we haven't seen sufficiently bold action from the government" to combat the financial mess, but she does give Mr. Obama some credit, saying the passage of the $787 billion stimulus package "was actually really huge."
Peter Morici, a University of Maryland economist, said that while the stimulus package "will create a couple million jobs … it is terribly expensive for the impact it will have."
Morici was particularly critical of Treasury Secretary Timothy Geithner.
"He shows up in town with a terribly vague plan that frankly if a graduate student handed it in, I would tell him to leave the program. I'd tell him to register at the Baltimore Academy for Pastry Chefs."
Since Mr. Obama took office, key financial indicators have taken a beating. The Dow Jones industrials are down 18 percent. And unemployment has risen from 7.2 percent to 8.1 percent, reports CBS News correspondent Bill Plante.
Smith asked the panel what advice they would give President Obama.
Forbes said, "Three quick things: get rid of mark to market which is destroying banks and insurance companies. If he doesn't, this economy's not going to recover. Two, put in road bumps on short-selling like the uptick rule. Three, tell Mr. Bernanke at the Federal Reserve, get on the job and start pumping real money into mortgage-backed securities."
("Mark to market" is an accounting device which assigns value to assets based on their current market price, not potential future value. With the economy doing poorly, Forbes is arguing that mark to market unnecessarily weighs down the balance sheets of banks and insurance companies. The "uptick rule" is a pricing restriction on short-selling that was eliminated in 2007 by the SEC in order to evaluate its effectiveness.)
Freeland suggested President Obama use his "bully pulpit and your very effective communication skills to get a lot more money from Congress for the banks, maybe as much as $1 trillion and use that money once and for all to clean them up."
As for Morici, he said: "Create a bad bank, sweep all the questionable assets off. … At that point, Citigroup looks desirable. It's got 8 percent of the deposits, lots of branches with shiny offices. Fine, you can sell new stock into banks. That way the shareholders aren't rewarded for what's happened. … They get recapitalized. They can pay back their TARP money and we get new management and go forward."
Complete Coverage: Obama At 50 Days
- The Obama Presidency: Fifty Days And Counting by Mark Knoller
- 50 Days: Is Analysis Premature? by Steve Chaggaris
- Video: Bob Schieffer: Obama Has Been "Very Ambitious"
- Obama And The Economy: Too Much Or Not Enough?
- Early Show Roundtable: Obama Scores "Incomplete" In Economics
- Michelle Obama's First 50 Days
- Obama's First 50 Days: Dow Minus 18 Percent by Dan Farber
- More 100 Days Coverage: Obama Day By Day | Major Speeches | Pictures | Full Coverage
Also, make your predictions about Mr. Obama's approval rating after 100 days and after 1 year.
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GREAT POST!!!
bears repeating -or at least looking up in these comments for those who haven't yet.
Macroeconomics fixes move at glacial speeds and only after much time has been devoted to crafting actions to be taken in consultation and coordination with many other nations.
Posted by jmcgilvray at 10:25 AM : Mar 10, 2009
First do no harm!!!
the guy has no idea what he is doing. He talks pretty and acts ugly. Prefers to attack a talk radio host and insult the British over addressing the economy in proven ways. Thinks he knows better than proven economists.
You can say its too soon but he has already established plaans to create more debt than Bush did. He is using the financial mess to spend the last of your money before you catch on.
That is the problem with the economy and none of the mainstained media will address this fundamental issue (maybe because they are owned by the fascist corporations themselves).
Posted by noloyalisti at 10:28 AM : Mar 10, 2009
Lets see, you used words like: McSame, fascist, corporatocracy, murderous, mainstained media. You imply that the very industries we depend on for worl leadership are somehow beneath you. You accuse the press of being in bed with corporations (the same press that fully supported the Obama campaign).
I conclude the following:
1. You are short on reason and thought,
2. You somehow think unsubstantiated accusations are worthwhile.
3. You prefer the politics of anger over the wisdom of reason.
Yep, you are a paid shill for the far left.
That is the problem with the economy and none of the mainstained media will address this fundamental issue (maybe because they are owned by the fascist corporations themselves).
Posted by noloyalisti at 10:28 AM : Mar 10, 2009
Lets see, you used words like: McSame, fascist, corporatocracy, murderous, mainstained media. You imply that the very industries we depend on for worl leadership are somehow beneath you. You accuse the press of being in bed with corporations (the same press that fully supported the Obama campaign).
I conclude the following:
1. You are short on reason and thought,
2. You somehow think unsubstantiated accusations are worthwhile.
3. You prefer the politics of anger over the wisdom of reason.
Yep, you are a paid shill for the far left.
Only 8% of this stimulis will be felt in 2009. Most will roll into 2010, 2011 and even 2012 (election year).
As the Fed Reserve Chairman has said repeatedly, a true stimulis package needs to be TARGETED, TIMELY AND SHORT TERM.
The Democratic stimulis fails on all counts.
Once again, Congress has used the Audacity of Deception to accomplish their personal hidden agenda.
Who are the fools? You and I.
jr
actually thought that the treasurer personally signed all those
worthless dollars.
That is the problem with the economy and none of the mainstained media will address this fundamental issue (maybe because they are owned by the fascist corporations themselves).
The reality is that the republican party is opposing Obama for purely political reasons. I think that this will hurt the republican party in the long run and that's a good thing.
"He shows up in town with a terribly vague plan that frankly if a graduate student handed it in, I would tell him to leave the program. I'd tell him to register at the Baltimore Academy for Pastry Chefs."
Geither's problem is that deep down he knows the zombie banks are going to need to be nationalized . Until then, for whatever reason, he is trying to protect a failed system.