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Monday, December 6, 2010

Manny Mondays: Has Our National Affliction Reached the White House?

Morning all! I know that most of us want to stay away from overt political commentary on this blog, but a NY Times Op-Ed caught my eye over the weekend because it touches on one of the seeming afflictions of the populace that has both mortified and stupefied yours truly, in addition to other posters and commenters at other blogs. What's this "national affliction", you ask? Answer: Stockholm Syndrome.

What is "Stockholm Syndrome", you ask? Here is a rough definition of it courtesy of Wikipedia:

In psychology, Stockholm syndrome is a term used to describe a paradoxical psychological phenomenon wherein hostages express adulation and have positive feelings towards their captors that appear irrational in light of the danger or risk endured by the victims, essentially mistaking a lack of abuse from their captors as an act of kindness.[1] [2] The FBI’s Hostage Barricade Database System shows that roughly 27% of victims show evidence of Stockholm syndrome.[3] The syndrome is named after the Norrmalmstorg robbery of Kreditbanken at Norrmalmstorg in Stockholm, in which the bank robbers held bank employees hostage from August 23 to August 28, 1973. In this case, the victims became emotionally attached to their captors, and even defended them after they were freed from their six-day ordeal. The term "Stockholm Syndrome" was coined by the criminologist and psychiatrist Nils Bejerot, who assisted the police during the robbery, and referred to the syndrome in a news broadcast.[4] It was originally defined by psychiatrist Frank Ochberg to aid the management of hostage situations.[5]

It's been my premise since this crisis started that much of the public continues to suffer from at least a mild form of this affliction, with many, instead of "connecting the dots" by doing some actual critical thinking, continually defending their "captors" or "masters", including the big Wall Street banks, banking system itself, and the Fed, as well as those political leaders who continue to make policy decisions that do actual great harm on most of its stakeholders, namely We the People, instead of benefiting us.

Well, according to Frank Rich in yesterday's Sunday NY Times, this affliction may have also reached the Executive Suite in the White House. Rich eviscerates the President for continually trying to placate the GOP, a body that has continually and openly stated that its main and only goal is to destroy his presidency and "make Obama a one-term president" no matter the short or long term harm inflicted on the country as a whole. Here are some key passages from the article:

This dynamic was acted out — yet again — in President Obama’s latest and perhaps most humiliating attempt to placate his Republican captors in Washington. No sooner did he invite the G.O.P.’s Congressional leaders to a post-election White House summit meeting than they countered his hospitality with a slap — postponing the date for two weeks because of “scheduling conflicts.” But they were kind enough to reschedule, and that was enough to get Obama to concentrate once more on his captors’ “good side.”

More here:

And so, as the big bipartisan event finally arrived last week, he handed them an unexpected gift, a freeze on federal salaries. Then he made a hostage video hailing the White House meeting as “a sincere effort on the part of everybody involved to actually commit to work together.” Hardly had this staged effusion of happy talk been disseminated than we learned of Mitch McConnell’s letter vowing to hold not just the president but the entire government hostage by blocking all legislation until the Bush-era tax cuts were extended for the top 2 percent of American households.

Rich goes on to make the very important point (I believe) that what the country yearns for (and thought it was getting in Obama) is real leadership, which means someone who can make the difficult decisions and make the case plainly and bluntly to the American people (speak the "hard truths"). In short, what people admire in a leader is continually knowing what they stand for, which might partially explain George Bush's ability to get elected, then re-elected, in addition to being able to get much of his agenda through Congress without even close to a filibuster-proof Congress.

Now I think that "W" was wrong on just about everything, but we always knew where he stood on the issues and who he was representing (he certainly didn't care about what I thought or the 50% of the country that didn't vote for him). Obama seems to lack any conviction of just about anything. Everything is up for negotiation right off the bat, even his most prized chips. It would be one thing if he were a shrewd negotiator but he gives up his most important negotiating chips right from the get-go, which is very disheartening to many people who voted for him in '08. In times of crisis, the country needs a leader with a capital "L" that can use the bully pulpit to stand up for his ideals and values (assuming he has any) and rouse "We the People" to follow. Obama seems to be more of conciliator and mediator and one who prefers to find the "good" in his adversaries and namely "get along" with the other side and find what he perceives to be "middle ground", even if his enemies ending up getting the lion's share of what they want, while the other side fights for scraps off the table. That might be OK if we weren't in a time of dire crisis where what's required, and what the people yearn for, is a real leader who LEADS by and with his values and convictions, even if many might disagree with them.

Here's more from Rich on how NJ governor Chris Christie is governing, no, LEADING, in contrast to Obama, and how even many of his adversaries seem to be falling into line:

Christie’s popularity among national right-wing activists and bloggers has been stoked by a viral YouTube video where he dresses down a constituent in a manner that recalls Ralph Kramden sending Alice “to the moon.” But the core of Christie’s appeal at home is that he explains passionately held views in concrete, plain-spoken detail. Voters know what he stands for and sometimes respect him for his forthrightness even when they reject the stands themselves. This extends to his signature issue — his fiscal and rhetorical blows against public education. He’s New Jersey’s most popular statewide politician despite the fact that a 59 percent majority in the state thinks public schools deserve more taxpayer money, not less.

G.O.P. propagandists notwithstanding, Christie’s appeal does not prove that New Jersey (and therefore the country) has “turned to the right.” It does prove that people want a leader with a strong voice, even if only to argue with it.


A lot can happen until the '12 election, but I fear for this reason among all the others at this point Obama will not only be a one-term president, but he may even see a primary challenge (which actually might not be a bad thing for the Dems and country long-term, as I think it's time to break the stranglehold the current two-party system has on the country).

Go read the whole article here, and if you have time, read many of the reader comments as well. They are MOST telling of the increasing despair that's out there, and gaining momentum about the President's lack of toughness, resolve and real leadership qualities.

All the President's Captors

64 comments:

  1. Great, great post, Mannwich. Thanks.

    In fact, one of the 4 market factors in conventional thinking is "psychological". Reading Samuelson, it is as important as "Fundamental" and "Technical" and "Structural".

    I wonder how much of our trading is being influenced by the Stockholm syndrome. I never thought of it as a "captor" issue before, but I will be thinking about that for awhile.

    Great post.

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  2. nice post, Jeff.

    took Frank a while to catch on to the meme, no?

    LSS: 44 is FOS. peep that believe he was going to "bring Change" are, hopelessly, deluded..

    btw, I hope you, and yours, had a nice Thanksgiving weekend..

    AAIP

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  3. though, Rich is Wrong..44 is not a 'Captive'.

    He's part of the, alternating, "Good Cop/Bad Cop"-routine being played out, still--holding the 'Cained Peep captivated by a stupor-inducing cascade of FUD (fear, uncertainty, and doubt)(at the min.)

    AAIP

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  4. Thor - When I logged on to the internet this morning the first thing that came up was; "Is Sarah Palin, America's Princess Dianna"

    Well I know how much you LOOOOOVVVVVVVEEEEEEE Sarah, so the first hing I thought was is who would win in a cat fight?

    Mutt

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  5. I had similar thoughts, Hoffer, and am sympathetic to that argument too (that Obama is merely playing his role in this most cynical theater performance). I guess deep down I'm hoping that's not the case because it shows things are even more screwed up than I thought. The people, however, are clearly being held "captive" and have been for quite some time. Anyway, out of pocket most of the day today. Back later.

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  6. Bernanke's printing and the dollar goes up. I guess European debt issues are more improtant today.

    @Dan, you did call for a directional change today, if I read your correctly?

    I Can

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  7. David Einhorn on CNCB today. Videos. www.cnbc.com

    He's long Gold, Apple, Pfizer, Sprint, Vodafone, short St joes and rating agencies. DGDF and CBs outprinting each other theme.

    H/t - Trader Mark at fundmymutualfund.com

    I Can

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  8. Manny - your best post ever, Thank you!

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  9. I see it is another rip roaring day today.

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  10. Great post, Manny. Have to agree with Thor, your best. The comments after Rich's article are pretty interesting as well.

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  11. Latest Hugh Hendry letter -

    www.businessinsider.com/hugh-hendry-december-letter-2010-12-06

    I Can

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  12. Governor Chris ChristieDecember 6, 2010 at 12:27 PM

    I'm not just popular with "Right Wing Activists."

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  13. Please - A 51% approval rating would only qualify as "popular" to "Right Wing Activists"

    Stop talking your book already.

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  14. Hey Andy,

    If you really love us so much that you cannot bear staying away, the least you can do is not be ashamed to use your real name. Your obsession is even creepier than the "one who finally got the message".

    You can't hide from Google Analytics.

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  15. :-) yeah, we don't bite. . . much

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  16. Look at that spike in oil! Man, gas is already nearly $3.50 here. I'm not looking forward to a tank of gas costing 75 bucks again anytime soon.

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  17. @Thor, oil equities arn't following that oil spike. My Suncor shares arn't moving, red!

    Cann't have $100 oil? Gold, and silver spikes, no one cares!

    I Can

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  18. ICan - Me thinks we might see $100 oil again before too long, what do you think? Honestly, I never dreamed it would go over $80 again anytime soon.

    Gold looks like it's well on it's way to $2k. I still chuckle every time I think back to all those "gold will never see $1000 again". That's one bubble that's going to take a lot longer to pop than some people have predicted.

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  19. One of the things that scares me a lot - is this prediction (which I strongly agree with) that it's going to take at least another five years for the unemployment rate to get below 6%.

    I don't believe we're going to be able to make it a whole five years before we have another recession, and we all know that the next recession will probably be at least as bad, if not horribly worse than this one . . .

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  20. @Thor, only market movers like the trading desks of wallstreet banks know where they are taking this maket?

    But logic says $100 is counterproductive to Bernanke's efforts. That's why maybe oil shares aren't moving higher with oil.

    Speculators are running out of bubble ideas.

    I Can

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  21. Nat. gas moves on days like today.

    HNU.To up 10% and drops on bullish days.

    I Can

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  22. Thor (2:21) - You make it sound like the resession actually ended. If it did who did it end for? The rich and the banks who got bailed out?

    There are 2 million people praying the tax cuts will get extended so their 2 years of unemployement will not end.

    Wages for many jobs are going down and kids are graduating from college with degrees who can not find a decent job.

    I don't want to sound all doom and gloom, but if Ben Bernankie ends the free money to the banks, we will have a meaningful correction that clears off a lot of needless debt now. But if if continues to (Which he will) we will eventually have the correction anyway.

    With 10% unemployed and possibly up 17%, people who are way underwater in the morgages and no real job prospects (Out sid of Wall mart) I personally don't think the recession ever really ended.

    But what the hell do I know?

    Mangy Mutt

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  23. Mutt - Ah yes, I should have clarified that: "assuming we stretch our imaginations that the current recession is even over" :-)

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  24. Thor - That is a very politically correct way of saying that :)

    Mutt

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  25. Mother of all bubbles - Vancouver property prices.

    "Vancouver building permits on the rise: StatsCan". www.bivinteractive.com

    HongKong money coming over. HK property prices are insane due to mainland China money laundered there. And from there to Vancouver.

    I Can

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  26. ICan - Food for thought! Either way, Vancouver may end up looking like Vegas 10 years from now.

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  27. @Mangy: Seems like we're in a bifurcated "recovery" and "economy" whereby the polarization and stratification of the classes becomes even more pronounced, so it depends on one's lot in life, I think. I do know that in the area I live it seems like it's gangbusters again (crowded stores and restaurants even during the week), although I realize things on the surface may be very misleading.

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  28. Back from a great little 3-hour skiing outing at our little ski bump with the wife this morning, who has the day off today. A lot of fun! Getting warmed up for our little CO ski trip around the holidays.

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  29. Manny - was thinking the same thing this weekend while I was out running errands. Target, Home Depot, Bed Bath & Beyond were literally mobbed. I thought to myself as I drove from place to place, looking at all the new construction and street repairs that a person would never know that the unemployment rate in SoCal is close to 15%.

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  30. Good article at the NYT -

    Mounting Debts by States Stoke Fears of Crisis

    ...The federal stimulus money increased the federal share of state budgets to over a third last year, from just over a quarter in 2008, according to a report issued last week by the National Governors Association and the National Association of State Budget Officers. That money is set to run out next summer. Tax collections, meanwhile, are not expected to return to their pre-recession levels for another year or two, given that the housing market and broader economy remain weak and that unemployment remains high.

    I didn't know the feds were covering that much of the shortfalls for the states. That's going to end for good next year so 2011 and 2012 are going to be do or die for the states.

    Denise - What do you think is going to happen in Illinois? I've been more optimistic for CA since the election but we'll have to see next month when Brown enters office and releases his new budget.

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  31. @Thor: Our outgoing governor and potential GOP '12 candidate, Tim Pawlently is leaving his job saddling the state with a $6 Billion deficit. Heckuva job, Timmmy. Way to pass on the problems to someone else and claim none of it was your fault! Politics par excellence.

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  32. No wonder why my property tax bill went up 10% for next year. Ugh.

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  33. @Manny:thks for the post. French president stands at the exact opposite of the spectrum:a good part of the opinion is angry at "his highness Sarkozy". Many picture him as a despote,who wants a say in every matter,sometimes sneaking into fields beyond the scope of his role as France president.

    Puppets or tyrants, Obama and Sarko do share at least one common point:they seem to accomplish little..

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  34. Wolfie - Fascinating take on Sarkozy! I didn't realize he was that unpopular in France.

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  35. @WolfStreet,

    businessinsider.com picked up your story re run on banks -

    "Former Soccer Star is Trying to Launch a Massive Run on the Banks in Europe".

    I Can

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  36. Obama announces tax deal. Tax cuts and unemployment insurance will be extended". www.businessinsider.com

    My question? WTF?

    How will you balance your budget? Isn't that what got you in trouble in the first place? That's what David Stockman was saying - Regan did the same thing.

    Yes, I am for a fair society - social security for those who need it. Those who can, should pay taxes. We do here in Canada.

    Kick the can and make the savers pay for it.

    I Can

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  37. Barry sometimes can come up with a funny:

    3. Allow (moderated) comments: Wanna learn what the public thinks? Allow comments. But not just any comments — the unwashed masses are, well, unwashed. This means you must be a little selective. Make readers register, and screen out the obvious loons. Once you eliminate the demented crazies, gold bugs, and ZH readers, you will be left with some interesting feedback from the public.

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  38. Hah - he's right though. Of course, many of us are ZH readers!

    I did think that post was a hoot though - BR giving advice to someone so far above him in the world of economics.

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  39. ICan - Can you believe that BS? All we do in this country anymore is kick the can, from city governments all the way up to The White House. No wonder the only people left in politics today are the nut jobs.

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  40. @Thor,

    Seriously? How far can you borrow into the future? Or you just take things free and write your own rules. This I mean someone is not paying for their lunch!

    Even in Iceland - someone borrowed money, bought stuff and services and refused to pay for it.

    For me that's AMORAL!

    I Can

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  41. ICan. We've become a Banana Republic. I can only hope that when it does finally all come crashing down, we make the right choices as a people. There are a lot of very vocal and angry people out from a variety of differing social and economic groups. I worry that the wrong group, say the tea baggers, gets control of the white house (they already have The House), we'd be screwed in that event. I I wouldn't want to be non white, gay, or in need of any sort of economic or social help were that to happen.

    Scary times are a comin'

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  42. @anonymouse:

    They changed your Hendry link to

    http://www.businessinsider.com/hugh-hendry-december-letter-2010-12

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  43. Actually, it looks like the hendry letter is gone for now. But the summary link above still works.

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  44. @Anonymous:

    ICan, USO is NOT where you want to be right now. It's relative strength is only at .02 above the S&P. That means a bunch of the oilers are below the S&P.

    The stocs are above 80%. I'm thinking there will be a pullback soon.

    Looking at BP, COP CVE CVX FTO HES MRO PZE REP SU TOT AND XOM, the whole thing averages only .04 above the S&P. SU is at 0. SU's stochs are at 80%+. Technically speaking I wouldn't choose SU right now, the sector's performance is bad, and SU's performance is below the sector.

    FTO may be a candidate on a pullback. They are a shining star in the sector.

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  45. @Thor,

    Illinois will have to raise the income tax and cut spending. Plus many municipalities got fat during the housing boom of the past 50 years and simply raised taxes to cover their budgets. Now that is history and people are appealing their real estate taxes left and right.

    For instance, our library is open every day with very liberal hours, we could save a bundle by cutting back those hours. We have already cut many jobs and are looking to cut more. Our town's government has also combined services with other adjacent towns so that there is much less duplication of services with little to no effect on the quality.

    During economic hardships the manager has the will to cut as thankfully it is very difficult to push through any tax increases in our town.

    But I imagine that there will have to be some sort of crisis before they can raise the income tax, the state already is a terribly slow payer.

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  46. @Thor 9:07

    OK. Let's get ready now. What can we do? I read "Conquer the Crash" but I'm not convinced that applies to what's coming.

    What now?

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  47. Rock - your guess is as good as mine. Who knows which way this is going to break. What's going to be safe? Gold? Dollars? Real Estate? Having no debt, like you mentioned earlier. But will your cash be worth anything?
    So many variables and so many choices, do any of us really know the best way to get ready? :-(

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  48. @Dastro
    RE: VAR

    My brother the doctor says that the hospitals are going to own everything--equipment and services. I guess that means doc-in-the-box will disappear except for primary caregivers.

    He says that over the last3 years, his income has dropped by 50%. And they cannot convince the hospitals to purchase new equipment to replace their current stuff that is wearing out (they had failures on flex cables for the MRI, and the sensor module for the cat scanner died and they cannot get a new replacement part, only a used one.)

    The reason for this is because the number of patients they treat that don't pay have gone up to 50% of the total, and these patients are the ones most likely to sue.

    VAR is not good from a structural view. However, we may want to look at hospitals in the future.

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  49. @Thor
    I dunno either.

    We will be deflationary for a long while, except for inflation on the prices of things we need, as Dss pointed out. But no corresponding inflation on our worth, our salaries.

    That means you'll be paying off your house in dollars that cost more. Not less, as is your hope with inflation.

    We are toast.

    The Bernank's printing, but the cash's going offshore to emerging markets. We're moving our cash and revenues to offshore divisions to avoid taxes.

    We've got to get our lawmakers to figure out how to reverse this process.

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  50. ICan - You asked what was wrong with the US earlier. This is part of it

    http://www.alternet.org/newsandviews/article/379331/right-wingers_trying_to_oust_speaker_of_texas_state_house_because_he%27s_jewish

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  51. I just don't think it is going to be as bad as everyone thinks. Sure, there are going to be some terrible pockets in our economy and our standard of living will continue to fall, but in the end, we still live, eat, spend, raise our families, even if it is at a much lower level for many. There are worse things in this world.

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  52. And I assume that my children are going to be living at a lower standard of living than the one they were raised with, my biggest fear is the affordability and access to health care for them as well as myself.

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  53. Denise - I think we could end up being Japan II. I doubt it though, I think our problem run far deeper and the choices everyone is making (ever increasing amounts of debt) right now are going to make things even worse once things do turn again.

    I look at countries like Ireland and Greece, who both have just saddled themselves with debt that they have no hope of ever repaying. There is no possible way that the Greek or Irish economy are going to ever grow fast enough to make a dent in their debt obligations so those obligations will continue to grow taking out an ever increasing share of all GDP. That's unsustainable, so at some point those countries, and probably Portugal, Spain, and Italy, along with them will all default, which will cause a massive downshift in the world economy . . .

    So there's that :-)

    Then, what are the states going to do? They have literally trillions in unfunded obligations both off and on the books, those soon to be retiring public employees are not going to get anywhere near their promised pensions - once the realization of that really sinks home, or is publicly announced, I think things will again head south fast.

    Same for health costs - out of control, that can't go on forever and I don't think the landing for that is going to be a soft one. Once all the boomers really start pouring into Medicare the entire system is going to fail - so future beneficiaries are going to have to take a massive cut in their benefits. It's guaranteed, the money isn't there and the politicians won't do anything to fix it.

    I could go on, but I think you get my point, we agree on a lot, but in this case I think we're going to have to agree to disagree :-) I think that we will skate along the bottom for a number of years, and then some large shock to the system is going to finally blow and set off a chain reaction that starts the ball rolling on Depression 3.0. How far down we go next time is anyone's guess. . .

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  54. I'm in a grim mood this evening, sorry :-)

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  55. @Dss:

    I hope you're right. I really do.

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  56. Excellent post Manny.
    Looks like we humans enjoy behaving in a little convoluted way from a rational point of view.
    On the other hand across milennia is the way populations acted which was a "very rational" approach to deal with the powerful in order to survive; so from a vantage point involving a long time span maybe modern rationality (who dethrone that older rationality?) is the newcomer and so the irrational thing to do.
    Very puzzling from today's point of view.

    I Can
    Yes I keep the same view till early September, nov 17 was critical and today is probably a turning point but more like a second order type, not as important as Nov 17 (more properly the 16 th).
    Because I didn't study more deeply this coming couple months I'm a little lost I will catch up shortly.Anyway the trend is up and a continuation looks harder than a reversal that why Ib think that we'll go up. Is very very hard to live the Lehman level behind (wall of worry).

    Rock
    I put a screen with all the stocks and I'm going to check how many worked as planned and who make me look bad in order to have percentagewise a failure rate.
    Will see.
    Dan

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  57. Meant
    "...that's why I think that we'll go up".

    "...Is very very hard to leave the Lehman levels behind".

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  58. I Can@5:10 : thks for pointing to this article about today's "bank run"(which ultimately led me to another one @ZH).

    The movement has been relayed by French MSM (and some English ones, like Guardian). However, most, if not all of them, were aimed at bashing this action, often by ridiculizing Cantona,the public figure who kind of started the fire. That's not surprising coming from our tasty "experts",who,despite admitting that banks must take some of the blame for the mess,argue that:
    *it can't work (too few people): so what? we'll do it again, this one is just a warm up
    *even if it does succeed,it's the people on main street who will feel most of the pain: the system seems headed to eventually collapse on its own.So the common people will suffer either way,maybe even harder if we let the whole story unravel by itself in due time
    *it's irresponsible: says who?
    *you must let the officials do their job of devising tighter regulation for the banks: only tightening we'll end up with is austerity for the majority

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  59. Thanks for the cheery thoughts, DAstro. I was feeling pretty down.

    Yep yep yep yep yep yep yep yep yep

    Un-hun un-hun

    Hope for the future.

    yep yep yep yep

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  60. @Thor,

    I just am not that pessimistic about the future. Greece's citizens have plenty of money, they just refuse to give it to the government. Their government is bankrupt, the citizens are not. Ireland may be in the same type of situation, I am not sure. But their economies and populations are tiny compared to the rest of Europe.

    We will go along like Japan, but a few simple things could turn it all around. The tax giveaway to the rich will have to stop. Tax their earnings over $106 to make SS solvent, and tax estates over 10 million. There were studies that said that a public option would save billions in health care costs. Anyone over 50 should be allowed to join Medicare so that they can keep working, otherwi
    se we are going to be the land of the unemployed over 50. Tax corporations like they used to. There are so many things that could be done if they really wanted to stop giving our country away to the rich and passing the debts on to everyone else. It could be done and might have to be done. It isn't that there isn't money in this country, it is because we spend it foolishly and allow fraud and waste because no one wants to spend the money to prosecute it or install computers systems to catch it.

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