If the markets don’t respond well to the results of the G-20 meeting, there is a reason – other than a solemn promise to waste money, very little was accomplished, and the crucial work of rearchitecting the financial system was put off until later. This much is clear from almost any account of the meeting, even though headlines have blared that there was a global agreement for concerted action to meet the crisis. It is almost certain that some form of Keynesian stimulus will be on the menu, as will revenue reductions, in order to appease business opinion but beyond this, nothing has been done to look at either the reasons, or the solutions for the basic problem.
In no small part this is because the leadership of the US has gone from lame duck to dead body. As Andrew Ward and Edward Luce put it:
When Mr Obama met George W. Bush in the White House on Monday, he was careful to avoid any photo-opportunity with the out-going president, whose approval ratings are the lowest ever recorded. While Mr Obama’s decision to skip the summit and stay in Chicago can be justified on protocol grounds, it may reflect his ambivalence on European-led efforts to tie the US to tougher financial regulations.
What is obvious, or should be, is that the system was corrupt from top to bottom, from the sex used to push mortgage packaging, up through Freddie Mac fraud too large even for the nearly toothless SEC to overlook.
As fights loom this week over both the fate of the Big 3, it would be easy to lose sight of whether the nomination of Neil Barofsky will go forward. But given the people invited to speak, it’s not exactly a balanced presentation of the issues. Scheduled up are Hank Paulson, Ben Bernanke, and a gaggle of people representing those who are going to be regulated, but no one to represent those who are supposed to be protected. Mr. Barofsky was, at least, involved with mortgage and securities fraud work when he was with the Southern District of New York, at a time when the politicized Justice Department was cutting back on white collar crime enforcement to engage in vote fraud.
It should be clear that a more balanced look at the nominee is needed, he is going to be the Watchman for the single largest emergency spending spree in global history.
Fortunately, the President-elect was ahead of the curve in sponsoring mortgage fraud legislation, and while there is only one President at one time, this would be a good chance for still Senator Obama to make his views known, even if quietly, on enforcement of the very troubled TARP program.