I voted for President Obama with great enthusiasm. I supported his proposed policies, both domestic and foreign. I am impressed with him as a leader. I think the Obama family are delightful. I believe the Obamas are likely to be the family most like the Gruntleds to ever live in the White House. This first week of the new year I am going to offer five brief judgments on how the first year of the Obama administration has gone, inviting your replies.
The most urgent problem President Obama faced when he took office was the collapse of the economy. A few companies that lent money were so large, and took risks so huge, that when the inevitable bubble-burst came they threatened to take the world economy with them. This handful of firms consisted of some jumped-up stockbrokerages that called themselves banks, a massive insurance company, and automobile finance companies that incidentally made cars. They got around the sensible safeguards that we had built following previous collapses partly by skirting the existing regulations, and partly by the Bush administration's policy of ignoring regulations.
I believe that if the Obama administration had had even six months to deal with the under-regulated bubble-economy before it collapsed, much of the disaster could have been averted. But that is not the way it played out. When the collapse did come, the Bush administration was paralyzed. They bailed out some firms and let others collapse piecemeal, with no larger plan. When Obama took office his half-assembled team was stuck with the commitments outgoing Treasury Secretary Paulson had made - and still had to save the actual economy. And the Bush bailouts saddled the new administration with gigantic debts that will take years of recovery and prudent administration to overcome.
SO the Obama administration had to save the remaining Wall Street "investment banks." It sensibly brought them under the regulations that actual banks had to follow. They were stuck with AIG and its ridiculously self-indulgent management, which the administration has tried to bring to some responsibility. I agree with the president that we could not simply let General Motors fail, though they richly deserved to. I believe the United States government, forced to be owners of what should be a grown-up company, has been remarkably indulgent in letting almost all of the bosses keep their jobs. I am hopeful that General Motors can learn a lesson fast enough to become an independent company again. It appears that Ford has learned from its brush with disaster and may become fairly responsible. I never thought Chrysler would reappear as an independent company once it was bought by Daimler, so I will not be surprised if it disappears.
The big picture is that the Obama administration saved the world economy from collapse. The parallels with the mess created by the Hoover administration, and eventually cleaned up by the Roosevelt administration, are clear. Things are bad, but getting better. We are not worried now about a massive chain reaction of collapsing financial institutions around the world, as we were in the last days of the Bush administration.
On the first great test, President Obama passed.