You call this civic media? Yeah, I do . . . sort of.

In a one-man-talking-to-himself sort of way. So far at least. Where a true civic media is dialogic, this site, so far, is pretty monologic. Too bad. I talk, but people aren't talking back - not yet. And where civic media sites are non-partisan and non-ideological, this one, maintained by a political independent who is relieved and often glad that Obama is our president, is marked by a deepening concern that his financial team of Bernanke, Summers and Geithner are so beholden to Wall Street that Obama is being shielded from the information he needs in order to help the U.S. and the world emerge from the global financial crisis. In the April 29 Press Conference held to mark his first 100 days in office, the President unblushingly conceded his ignorance of the coming crisis:

You know, when I first started this race [in December, 2007], Iraq was a central issue. But the economy appeared on the surface to still be relatively strong. There were underlying problems that I was seeing with health care for families and our education system and college affordability and so forth, but obviously, I didn't anticipate the worst economic crisis since the Great Depression.

I find this admission galling. It's hard to accept from an editor of the Harvard Law Review and a U.S Senator, surrounded by brilliant people, who reads a lot and can actually think straight. It's as if the Ivy League, Wall Street and the D.C. beltway suddenly sealed themselves off what by December 2007 was obvious to a lot of people. In late 2007 I myself knew fellow Realtors and loan officers here in Glenview, north of Chicago - who knew something terrible was bound to hapen - we just couldn't tell when it would hit. We saw it coming in our business and in alarm signals that were being sounded loud and clear in the financial media: Yves Smith, Felix Salmon, goldbugs like Jim Willie and Martin Wolf and John Authers of the Financial Times, for Pete's sake!How on earth could Obama and advisors like Austin Goolsbie have missed what was staring us in the face?

Yves Smith is one of many finance bloggers who could have saved America and the world endless grief had the Obama team read her posts in 2007. So are Obama's people reading her today? They sure should - her website has 25,000 hits a day. Here she dissects the flaws of Obama's finance team in a painstaking analysis of the New York Times' surprisingly harsh April 26 story about Tim Geithner. Her analysis prompted one commenter to say

I cried when Obama made these appointments. Summers, Geithner and keeping Bernanke. I knew all was lost. And now I watch as the whole thing falls apart.

Larry Summers, the ringleader of the Obama economic team, strikes me as a brilliant careerist in the mold of Henry Kissinger: a first rate self-promoter and a second-rate "realpolitik" thinker. To me, he's in denial about what first-rate thinkers like Steve Waldman are saying about the need for economic models grounded in a new understanding of sustainable wealth and wealth creation - a topic I discuss here. Summers and Co. are all the kings men trying to put Humpty Dumpty (American hegemony) back together again. It just won't work. (The Times article suggests that Summers, a big man at the White House, may be lobbying to replace the unpopular Geithner with a loyal fresh face. In other words, nothing will change.)

In his recent "100 days" press conference, President Obama named the economists he follows (scroll to "Where the economists are coming from"). The central debate in his mind, he said, is between Wall Streeter Robert Rubin and realative main streeter Robert Reich, with attention to corporate globalism critic Joseph Stiglitz and inflation-breaking Paul Volcker. And he sums up his philosophy nicely: "The truth is," Obama says, "that what I’ve been constantly searching for is a ruthless pragmatism when it comes to economic policy." And: "The touchstone for economic policy is, does it allow the average American to find good employment and see their incomes rise." Sounds OK, but can Obama's "ruthless pragmatism" put America's financial system on a sound and durable footing? Pragmatists lack vision. Their ideas work short term, not long. The President needs pragmatisim and vision. Is he listening to people like these:

• Charles R. Morris, author of The Trillion Dollar Meltdown, argues in a brief but prescient column that "Merrill Makes the Case for Nationalization" (1/29).
  
• Henry Kaufman, for decades a leading Wall Street insider, argues here that "We should, therefore, fundamentally re-examine the role of the Fed and the supervision of our financial institutions." He discusses the rise of a "social milieu [of policy makers that] encouraged financial decision makers to cherry-pick the theories that supported excessive risk taking. It discouraged whistle-blowing, not just by risk-management officers in large financial institutions, but also by the economists whose scholarship provided intellectual justification for the financial institutions’ decisions. The consequence was that scholarship that warned of potential disaster was ignored. And the result was global economic calamity on a scale not seen for four generations. (Financial Times 4/28)
• Steve Waldman: "If you believe, as I do, that we need a root-and-branch reorganization of the financial system, which must necessarily involve the dismemberment and intrusive restraint of deeply entrenched institutions . . ." (4/27)
• Barry Eichengren of the U.C. Berkeley Dept. of Economics argues that "The Great Credit Crisis has cast into doubt much of what we thought we knew about economics". (National Interest 4/30)
• Charlie Munger of Berkshire Hathaway says banks will use their “enormous political power” to prevent changes to the industry that would benefit society. (Bloomberg, 5/2)Univ. of Chicago Economist Anna Schwartz, a Friedman/Volcker pure monetarist, says the Bernanke Fed has misjudged the financial crisis (City Journal, Spring '09)
• Martin Wolf of the Financial Times says "The world economy cannot go back to where it was before the crisis, because that was demonstrably unsustainable. It is at the early stages of a long and painful deleveraging and restructuring. Fortunately, policymakers have eliminated the worst possible outcomes. But there is much more yet to be done before fragile shoots become healthy plants (4/21)
• Martin Wolf says that "Those who hope for a swift return to what they thought normal two years ago are deluded" (FT 4/28).
• Joseph Stiglitz (whom Obama follows) here calls for something Wall Street does NOT want: a new global reserve currency (3/26). The findings of the UN panel that Stiglitz chaired are described here (3/26). In this article in the South China Morning Post James Dorn (Cato Institute) challenges Stiglitz. Here the Wall Street Journal is defensively on China's call for a new global reserve currency. (American financial media largely overlooked or suppressed the Stiglitz story and are covering this issue poorly if at all. Shame on us.)
• Matthew Richardson and Nouriel Roubini punch holes in the Obama administration's case for progress towards restoring banks to solvency (WSJ 5/5).
• In her post on "The Banks and Orwell," finance blogger Yves Smith isolates some of the doublespeak that Wall Street chieftains are using to resist real regulation. She says that "M. Rodgin Cohen [managing partner of Sullivan & Cromwell] is already leading the fightback [against hostile public opinion]. Yesterday, he even had the gall to say that the system as currently constituted was fundamentally sound. Yes, for him and a handful of Goldman partners, I'm sure that's true, but on planet earth, it's a bit of a different picture." (5/9)
  

President Obama and the "Obama spring rally:" Standing here. wondering, which way to go . . .

Well that's how markets seem to feel in flat early morning trading today. That's also the first line of a gospel song by Thomas A. Dorsey, who wrote Precious Lord, beloved by Rev. King. Here it's sung by Mahalia. And really sung by Marion Williams.

I myself am standing here wondering, scratching my head at the morning's headlines and op ed pieces. The President may well feel the same way ("Stunned," he told Jay Leno, is how he feels about the AIG Bailouts that have sparked national outrage.) The headlines are conflicted even polarized. Something is happening, a groundswell of hostility towards the likes of AIG and it's hardly conducive to generating anything like an informed consensus on the future of the American economy.

The polarizing headlines include the dollar plummeting in the face of global doubts about Treasury Secretary's Geithner's shock stimulus plan announced Monday. Yet what's obsessing most Americans? Geithner's supposed foreknowledge of the AIG bailouts. Yet Alan Greenspan is now coming close to seconding Nouriel Roubini's call to nationalize (put in receivership) the supposedly too-big to fail "zombie banks" - the very banks that the Obama administration has committed itself, irrevocably it seems, to bailing out at a cost of trillions.

On the op ed front, William Greider says that "Obama Told Us to Speak Out" but asks "Is He Listening"? Good question, but shouldn't Greider be asking if the nation's media are making it possible for the president to hear anything but outrage, whether populist or elitist? A friend just sent me Michael Wolff's Huff Post thrashing of Obama's Jay Leno appearance last night. Wolff says Obama is like Jimmy Carter: ineffective. I have my doubts about our President, but aren't there better ways for smart people to use their ink than this?

For substantive critiques of the Obama administration, read Mike Whitney's "Bernanke's Witness Protection Program." For more than a year, Whitney has been writing presciently about the magnitude of present crisis. Here's the kind of discourse that Obama and the American people need to hear and process:

Last week, investors backed away from Bernanke's TALF, even though the Fed promised to provide up to 95 percent of the funding (through low interest loans) to investors willing to buy distressed assets backed by student loans, car loans and credit card debt. The potential investors "objected to the level of scrutiny that dealers would have over their books, arguing that the dealers' rules attached too many strings. Dealers were saying they take plenty of risk to facilitate the program and need to be protected in situations where the collateral or the client made mistakes or wound up ineligible." (Wall Street Journal)

7 PM CST. Is talk like this too risky for prime time TV? Hell no. The Fast Money crew on CNBC made these very points today. If clarity and transparency are important to economic recovery, surely the American people are entitled to hear too.

Standing here wondering, which way to go / So much confusion down here below . . .

Today, launching its "Future of Capitalism" Series, The Financial Times says that "The credit crunch has destroyed faith in the free market ideology that has dominated Western economic thinking for a generation. But what can – and should – replace it?"

9PM CST. The Dow closed down 122 today at 7,278, a bit shy of 300 points below its March 18 Obama/Spring market rally high of 7554. On the positive side, the lead story at the CNBC website says that "Home Sellers May Flood the Market Soon" now that the rate for a 30 year fixed loan, thanks to Geithner's shock stimulus, has fallen to 4.25% (I'm hearing 4.75% here in Glenview). BTW Martin Wolf of the Financial Times here discusses the stronger/weaker stimulus debate going on between, respectively, the US (Geithner) and Germany. And he sides with Geithner's strong stimulus position. Geithner will need all the help he can get if Mike Whitney reads the tea leaves right:

The TALF and the "Public-Private Partnership" are another slap in the face of the international community. They violate the spirit and the letter of the G-20 communique. It will be interesting to see if foreign holders of US Treasurys endure this latest insult in silence or if there's a sudden stampede for the exits. There's a sense that the world is getting fed up with the Fed's financial chicanery and would like to chart a different course. Enough is enough.

Definitely not want the world wants to hear before the big April 2 G-20 summit in London. What's more, most Americans are oblivious to this meeting's importance. Background is here, here, here, and here. As a nation, we have our heads in the sand, do we not? A correctable problem, to be sure, but only, as I keep saying, with the aid of a compelling, prime-time civic media.

Standing here wondering, which way to go / So much confusion down here below . . .

What's confusing me now is NOT these problems, but how hard it is to find a way to win support for a media that will enable America to solve them, as a people. A unifying media that will help 300 million people think (more or less) with one mind. Isn't it time we got to work on this? Maybe, I hear a voice saying, after the NCAA. Myself, I hear the President, while defending his embattled Treasury Secretary, saying "I don't want to quell anger, what I want to do is channel anger in a constructive way." This is not a task for the pundits on Meet the Press or Face the nation on Sunday mornings. It's not a task for the nation's (mostly failing newspapers.) It is, rather, a task for all print and electronic media. It's time for the media to channel this anger constructively on intelligent prime time reality TV. That, in a word, is the business model that the nation's media and the nation itself are looking for. In an age of convergence like the present, these two are inseparable. So far, if I had to pick a success story, I'd say CNBC, for all its faults, is coming closest to doing the job of being a mediating media right.

The Obama spring rally pauses as Bernanke and 60 Minutes skirt the bank solvency issue

Nouriel Roubini doesn't mince words. His March 14 post speaks of a "dead cat bounce" and a "bear market suckers rally". And of "a Ground Hog Day movie that we've seen at least six times . . . in the past year or so." Gotta say I love Nouriel even though one of my less enlightened friends jokes that I've become part of his terrorist network. But to show I haven't lost control of my affections, here's a comparison of Nouriel and Warren Buffet on the topic of bank insolvency that gives the laurel to Buffet. Then again, Kansas City Fed president Tom Hoenig here condemns Fed bailouts and calls for big banks to be "resolved [shut down] the old fashioned way."

The Dow closed down a bit today at 7,216. Yet it was fast off the blocks in early trading, up 150 points on news that Fed Chairman Ben Bernanke's comments on CBS' "60 Minutes" last night were driving gains in early trading on the Dow. So this rally isn't just a "spring rally", it's an Obama rally fueled in part by the President's concerted efforts to boost investor confidence by putting an end to fear itself. Wow. Stakes are high. There will will be much egg on many faces - and a hard fall, I should think - if this rally fails.

CBS boasted last night that no Fed Chairman had ever granted an interview like its "60 Minutes" interview with Bernanke. For the first time ever, Bernanke gave the viewing public inside glimpses into the heretofore sacrosanct Federal Reserve system: we saw the Fed Governors' 30 foot-ceiling, marble walled meeting room and a football-field sized underground vault where robot forklifts shuffled around shrink-wrapped pallets of paper money valued at $64 million each - too much for human hands to touch.

Well la di da. A key question, only glancingly addressed in the interview, was on bank solvency. CBS' Scott Pelle puts it to Bernanke at 11:35 into the interview:

Pelle: Are all the banks that you regulate solvent?

Bernanke: I believe they are, yes, but we are doing a, um, a stress test right now, where we're looking at . . .

Question: why Bernanke change the topic from solvency at present to solvency under the harsh hypothetical conditions of the stress tests? Why didn't Pelle press Bernanke on the solvency issue, which is critical not only for Nouriel and his "zombie banks" but for mainstream Republicans like Senator Richard Shelby and John McCain. What exactly is the basis for Bernanke's belief that the banks are solvent NOW? If they're solvent, wouldn't everyone benefit from knowing so now? To me, either Pelle dropped the ball or real doubts about bank solvency are keeping Bernanke (and CBS) from discussing this topic publicly.

The flipside of this question is to ask Nouriel, Shelby & McCain how they know the banks are insolvent. I'd also ask Nouriel to what extent his case for a bear market hinges on the matter of bank insolvency? If restored to solvency, could the banks lessen or possibly even resolve the problems he predicts in his March 2 post:

Of course you cannot rule out another bear market sucker’s rally in 2009, most likely in Q2 or Q3: the drivers of this rally will be the improvement in second derivatives of economic growth and activity in US and China that the policy stimulus will provide on a temporary basis: but after the effects of tax cut will fizzle out in late summer and after the shovel-ready infrastructure projects are done the policy stimulus will slack by Q4 as most infrastructure projects take year to be started let alone finished; similarly in China the fiscal stimulus will provide a fake boost to non-tradeable productive activities while the traded sector and manufacturing continues to contract. But given the severity of macro, household, financial firms and corporate imbalances in the US and around the world this Q2 or Q3 sucker’s market rally will fizzle out later in the year like the previous 5 ones in the last 12 months.

Nouriel speaks of imbalances. Does this mean solvency? Ouch! Questions, questions, questions, they keep popping up, gotta get outside for some exercise or I'll go nuts, thank goodness spring has finally hit the Midwest (where it's best).