Abe Greenwald describes some of the “buyer’s remorse” a few Obama supporters may be feeling now they can see his policies and personnel lineup take shape. Disappointments among supporters are inevitable, especially when expectations have been pitched so high. Some of this “remorse” will come from getting things we don’t want any more, under changed conditions. For example, Kathleen Pender of the SF Chronicle describes how Barack Obama’s campaign tax promises ought to wait until better times.
On the campaign trail, Barack Obama proposed more than a dozen tax changes that would affect individuals. The net effect would be to raise taxes on higher-income people and reduce them for low- and middle-income ones. Most of the ideas were floated before credit markets froze and the economy faltered. By the time the Obamas and their new puppy settle into the White House, things could be even worse. Pundits say this could force Obama to shelve his tax plans while he focuses on the economy.
The time-lag factor affects everything. Much of Obama’s foreign policy toward Iraq was formed when it was widely perceived as a disaster and Afghanistan was seen as the ‘winnable’ war, and we are now in a situation where the two theaters may have changed places. Although it remains to be seen whether BHO will adapt to circumstances or stick to a fixed plan no matter what the consequences, unforeseen explain why a candidate must often act contrary to his promises. “Change” is a fact of life, not a plan that a politician can necessarily impose.
In a way electing a politician resembles entering into a futures contract. Political supporters who “buy into” a promise may or may not get delivery; that is dependent on how sincerely a candidate offered his promises and whether they could ever be carried out to begin with. Sometimes what a political coalition bargains for turns out to be the last thing they need. Neville Chamberlain’s policy of appeasement was popular before bubble burst; what the public wanted turned out to be the last thing they needed.
PS: A reader sends this link to his own site on derivatives. He writes, “In the spirit of full disclosure, I’m a derivatives lawyer, and as such I have a financial interest in the public’s perception of derivatives. However, I have made a point of being thoroughly rational in my blog, to the point of exhaustion.” I’m including the link for readers who are interested in the subject.
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23 Comments
1. slade:RE the derivatives link
I don’t mean to be crabby but the diagrams don’t mean squat to me. The industry over-leveraged on pressure from Washington with no transparency in order to generate huge returns on junk disguised as AAA paper. It doesn’t take a diagram to understand that.
Nov 11, 2008 - 6:41 pm 2. evan:The difference between a political contract and a futures contract in oil is that there can be legal consequences for breaching the latter. Steven Landsburg has suggested that politicians should be able to be sued for breach of contract.
I tell my students that bubbles are greatest when the potential is highest but so is the uncertainty. Sen. Obama promised to completely “change” the way politics is conducted, certainly a remarkable achievement if he can pull it off. Alas, he didn’t clutter up the scene much with particulars, allowing everyone who wants “change,” even if what they want changed is unique to them, to think he was speaking to their specific desires. If the Obama bubble pops, this model suggests, it will pop hard.
Nov 11, 2008 - 6:42 pm 3. Tom:I wonder how much slack the public will cut Obama is policy diverges from what was “promised” during the campaigns?
It is one thing to put your faith in someone you know quite a bit about and then become disappointed when they don’t follow through on promises. If the justification makes a bit of sense, there is likely to be some additional faith invested in the individual.
It is another when one takes a leap of faith and puts their faith behind an untested and somewhat unknown person. If Obama starts backtracking almost immediately, will those who supported him become disenchanted much sooner than they would the well known person? Will those folks be more likely to feel they have been sold a falsehood?
Tough to tell but I can’t help but wonder.
Nov 11, 2008 - 7:00 pm 4. fred:He’s not even in office yet and some of the dopes who voted for him are showing their Attention Deficit Disorder. It isn’t Oobonga who worries me as much as it is the kinds of people who voted for him. THEY are the problem, long term. They are part of the reason why we might, in the future, cross a threshold that rips the country apart. We’re already hanging by a few threads right now, thanks to these idiots.
I hope that the new president can be moved by reality, and that reality will impress upon him the gravity of the foreign policy and economic problems this nation is faced with. And he might make fewer mistakes because of that.
But so many of these idiots who voted for “hope and change” (”I feel like Obama’s gonna put gas in my car and pay for my mortgage!”) are not anchored to reality at all. What’s it going to take for them to get dialed in?
Nov 11, 2008 - 7:16 pm 5. Kingston53:Obama won by making people on both sides of an issue believe he stood with them. Now comes the fun part when he will actually have to make a stand. I call almost hear the cries of betrayal.
Nov 11, 2008 - 7:45 pm 6. Unsk:What’s interesting to me about Kathleen Pender of SF Chronicle is that she intuitively knows tax hikes are the wrong thing to do in this present economic crisis , even though she is a liberal Obama supporter and despite all the class warfare propaganda the Chronicle spews out. .
Now if only we get the Messiah to understand the same thing.
He appears to be coldly clueless as ever, however.
Nov 11, 2008 - 8:09 pm 7. outa my league:slade #1 – “I don’t mean to be crabby but the diagrams don’t mean squat to me. The industry over-leveraged on pressure from Washington with no transparency in order to generate huge returns on junk disguised as AAA paper. It doesn’t take a diagram to understand that.”
I suppose the Wharton School Geeks could also (if they took a notion) conjur up esoteric mathematical mumbo-jumbo formulae to demystify the intricacies of arson/insurance scam payout probabilities, and protection/extortion scheme profitability.
Nov 11, 2008 - 8:18 pm 8. Marcus Aurelius:Evan #2,
The public punished the GOP for its failure to deliver.
I would also argue your idea on a bubble is incorrect, what you describe is the normal situation. When uncertainty is great the payoff has to be large to entice investors, gamblers, players, etc. A bubble is when payoff is or seems great and the uncertainty seems low. So, everyone stampedes into the investment even when it is seemingly way oversold. Who would turn down a sure win, with a great payout?
People were buying into crazy ARMS because they were CERTAIN they would have a lot of equity stored up in their real estate (how many times have you heard real estate is a sure bet in your life?) and could refi into lower fixed mortgage?
Despite Derivative’s Dribble’s claim that CDS and other derivatives are not gambling I would say key characteristics of gambling are present in most investing schemes, whether going long or short, whether buying puts or calls, whether buying swaps or some such of instrument. The basis of much of the math in modeling all of that is the math of probability and the foundational problems of probability are almost always stated in terms of gambling.
When you don’t know the future outcome of an event you depend upon you look for ways to mitigate the risk. The difference between investing and gambling is investing it is okay to work to fix the game, if you will, that is take concrete corrective action to minimize the risk. People who fix sporting matches go to jail.
Nov 11, 2008 - 8:45 pm 9. Marcus Aurelius:I knew an actuary once, and let me tell you, the stereotype of actuaries is based on reality!
Nov 11, 2008 - 8:48 pm 10. Tamquam Leo Rugiens:Obama created a carefully crafted set of perceptions that enabled a vast number of people to project their hopes and dreams on to him. This is nothing new under the sun, we see it around us all the time and we call it infatuation. People have become infatuated with him just as individuals become infatuated with one another. I tacitly demand that the other be a perfect mirror in which I can see and love my idealized self.
When people contract to be in a long term relationship, say a marriage, under these conditions something strange happens, they end up hating the person they formerly loved. This occurs because no other person can be a perfect mirror for my hopes and dreams. That mirror is a fragile thing framed by a real, living, breathing human being with real imperfections and, worst of all, hopes and dreams of their own. It cannot sustain my perfect illusion. Soon the loved one’s behavior no longer fits the ideal image and the mirror first cracks and then shatters.
This produces intense disappointment, and depending on the strength of my narcissistic dependency, rage. When that rage surges up the other becomes a dark mirror into which I project my fears and disappointments. Every bright and precious attribute becomes it’s own evil twin and love turns to loathing. Since the same process is usually operating on the other side the feeling is mutual. It is usually at this point, after repeated and increasingly strident demands that the other return to their former perfection, that the relationship ends, often explosively.
In the old model, in which committed relationships were understood to be permanent, the people involved often came to see, accept and even love the other for who they really were.
For the last few years now the process has worked in reverse. President Bush has become the dark mirror into which the deranged Left projects it’s own darkness. The real Bush was never able to shatter that negative illusion firstly because he didn’t really try to communicate himself to the nation, and secondly because the MSM maintained a carefully devised image of Bush the Awful, Bush the Devil.
Along comes Mr. Obama who very cleverly uses this negative projection onto Mr. Bush to present himself as Mr. Bush’s antithesis, Obama the Wonderful, Obama the Messiah. Of course this was abetted by the MSM who have become the willing tool onto which they have projected their own hopes and dreams.
It will be interesting to see to what extent this schema holds for the new President. How long before the MSM will no longer be able to shield the Real Obama from the public view? I’ll wager that once their own illusions begin to crack under the impact of Mr. Obama’s actual words and deeds they will no longer be willing to hold his halo aloft. At that point I suspect that we will see a lot of disintegration going on among those most enamored of Mr. Obama.
Nov 11, 2008 - 9:26 pm 11. Insufficiently Sensitive:I’ll wager that once their own illusions begin to crack under the impact of Mr. Obama’s actual words and deeds they will no longer be willing to hold his halo aloft.
They are that fickle, are they? How did they manage to continue the demonization of President Bush, and to declare all efforts of his administration to be abject failures, for eight solid years, 24/7?
Their memories of the doings of those Horrible Republicans (as gilded, polished, overstated, filigreed and blackened by themselves) will probably persist for several years before subsiding to the extent they might one day notice the clay feet of their current Galahad.
Nov 11, 2008 - 10:12 pm 12. Alexis:President-Elect Obama appears to be attempting to stack his cabinet with Senate colleagues. His overtures are causing embarrassment.
First, Senator Lugar (ranking Republican member of the Senate Foreign Relations Committee) declines to join Obama’s cabinet. Then, Senator Conrad (chairman of the Senate Budget Committee) declines to join Obama’s cabinet. Their reason should be obvious — these men wield great power in the Senate, and their power would greatly diminish were they to join Obama’s cabinet. President-Elect Obama should have known that, but he appears to be oblivious to how his overtures are causing embarrassment to his Senate allies.
President-Elect Obama probably thinks he is being nice to them when he is in fact offering them demotions in rank. They don’t want to be beholden to him; they want him to be beholden to them. Congressmen are notorious for having minds of their own. If President-Elect Obama expects to rule over them, he will have a tough fight on his hands.
Meanwhile, Senator Lieberman is going through a good cop/bad cop routine with Majority Leader Reid acting as the bad cop and President-Elect Obama acting as the good cop. If Senator Lieberman can’t see how he is in danger of becoming beholden to President-Elect Obama for his good standing in the Democratic caucus, there’s not much that can be done to help him.
Nov 11, 2008 - 10:27 pm 13. Semi Cartman:I’ll wager that once their own illusions begin to crack under the impact of Mr. Obama’s actual words and deeds they will no longer be willing to hold his halo aloft. At that point I suspect that we will see a lot of disintegration going on among those most enamored of Mr. Obama
Nov 11, 2008 - 10:30 pm 14. Semi Cartman:I’ll bet that there’s normally a lot of disintegration happening among the most committed groupies of the chosen one. The fanatic vanguard of a mass movement is usually made up of individuals with pretty shaky personality characteristics. In this case they’re distributed among a bazillion advocacy groups, identity organizations, fringe parties, etc; all liked by a common admiration of, and web subscription to Obama. Their opinions can be driven by pronouncement from on high, remember the contortions of the CPUSA during the buildup to WWII. Go along or risk excommunication, a fate worse than death. The normal supporters, the great majority, probably don’t care much what he does, as long as he remains Black and gets happy press.
President-Elect Obama appears to be attempting to stack his cabinet with Senate colleagues. His overtures are causing embarrassment.
This observation is pretty interesting. Any communication like this should be done on the hush-hush, through channels. We teeming millions shouldn’t be hearing about it. He’ll make himself appear Carter-weak a month before taking office.
Nov 11, 2008 - 10:45 pm 15. slade:Watch the Republicans do the same thing to Jindall in 2012.
Nov 11, 2008 - 10:57 pm 16. slade:I suppose the Wharton School Geeks could also (if they took a notion) conjur up esoteric mathematical mumbo-jumbo formulae – outa my league
Actually I think it was the boys at MIT who did most of the heavy design, but I expect the Wharton crowd was jealous.
If there’s anything funny about any of it, try watching Joe Kernan (MS MIT) and Carl Quintanilla go at it.
A real hoot, especially with Nouriel Roubini on the set.
Nov 11, 2008 - 11:11 pm 17. Fingers Crossed…He’s a flip-flopping liar:[...] Club covers Obama buyers remorse.: The time-lag factor affects everything. Much of Obama’s foreign policy toward Iraq was formed [...]
Nov 11, 2008 - 11:25 pm 18. Tarnsman:Re: Jindall in 2012
Rudy plans runs for Governor of New York in 2010. If he wins and transforms New York State like he did in New York City, two years later the buzz will all be Rudy. Especially if Obama pulls a Jimmy Carter/first two years of Clinton. Jindall will be mentioned as a possible VP pick.
One has to wonder if it had been Rudy/Sarah in 2008 would the estimated 7 million Republican/conservative voters that sat out the election have shown up at the polls? I think so and would have made the contest a repay of 2000.
Nov 11, 2008 - 11:29 pm 19. CPT, Charles:Something different for the fellow commenters at BC…
http://tiny.cc/z9Ht1
Let’s see if we can avoid this alt-real.
Nov 12, 2008 - 1:07 am 20. Bill R:He’ll make himself appear Carter-weak
Carter II. Disloyalty to subordinates, Inflation, recession, in-your-face radical Islamic attack.
Nov 12, 2008 - 6:02 am 21. Michael Hoskins:Sorta close to the topic…
MA #8.
There should only be two reasons for buying a house, to make money on a later sale or to pay it off and live in it until you die. There was a time when when the second was the norm. Now, as society has become highly moble and financially sophisticated, the first has become more prominent, thus the bubble. (Remember the S&L crises that first haunted McCain…same states, same scam, different leverage techniques).
What the home ownership segment of the real estate market should not be is a tax benefit. You should buy a home because you are willing to take the risk or you plan to stay there. (Yes all plans change…) When planning to stay, the idea of living on beans and rice and rice and beans for a while to make a killing doesn’t enter the game.
OK…a lot off topic. I’m done now.
Nov 12, 2008 - 9:14 am 22. Michael Hoskins:OK, not done.
My previous relates to the real topic of this thread directly. Many bet on the come. Now the dice are in the cup. They will hit the table in January and we will see the results in the first 100 days.
Some of the people I know took that approach…others voted for the place where they plan to live and die. We now have to wait for the politics to return to normal and refight the same old battle, between those who have all the answers, but none of the questions and those who have questions and are seeking answers.
Now I am really done…
Nov 12, 2008 - 9:19 am 23. Annoy Mouse:“In the old model, in which committed relationships were understood to be permanent, the people involved often came to see, accept and even love the other for who they really were.”
Funny, this nicely explains my hypothesis that as Bush-hangers-on could always find ways to justify things that were against the grains of their own ideals, nation building, et al, the Obama-ites will find no difficulty in rallying behind whatever course of action Mr. Obama makes. Like Choice is now the alternative of responsibility for Life, divorce an alternative to wedded resolve to preserver through understanding and compromise, so too we look at the office of the president as temporary, not only because the next election is only around the corner, but impeachment is no longer the final alternate.
True believers will remain steadfast. Pragmatists will cite; “He is a bastard, but he is our bastard.” This is all as it should be. President Bush proclaimed; “I am a uniter, not a divider.” This is all well and fine but as in any relationship, it takes two to tango and if you are up against an abusive, hateful partner, your fate is already made spite the best of intentions.
Now it will be interesting if the Media can now control their star or if they, from the sidelines, will be relegated to mere cheerleaders for the One.
Nov 12, 2008 - 9:39 amSorry, comments for this entry are closed at this time.