Article added on January 1st, 2009
So far, the slogans of
have translated into a rather centrist
cabinet. On paper at least, it looks relatively moderate.
President-elect Obama even
intends to keep Bush's secretary of defense, Robert Gates. Some may remember
Obama's initial plan for Iraq: no surge, instead an early withdrawal, which
would have meant an American defeat and probably chaos and civil war in
Iraq. One has to concede that Obama is able to learn from his mistakes.
Let's hope that, once in office as the 44th President of the United States
of America, he won't make strategic errors of the same disastrous magnitude.
President Obama's other bold choice was to appoint Hillary Clinton as
America's next secretary of state. Obama the candidate made several serious
gaffes traveling abroad, e.g. in Israel he told the Israeli that Jerusalem
should remain an undivided Israeli city. He probably wanted to make people
forget that before he had positioned himself as a strong advocate of the
As so often, Obama tells a specific crowd what they want to hear. Only a
minority has recognized his attitude as opportunistic. Therefore, he got
away with it. Once no longer president-elect but president, he will have to
take decisions which won't please everyone. We will soon find out whether he
is an able decider.
One thing is for sure, Hillary Clinton is the better foreign policy expert
than Barack Obama. She is a heavyweight and may well have an impact on the
Barack Obama had to reward Hillary Clinton because she
campaigned for him more than most primary losers in the past. Even with a
disastrous Bush presidency and the looming financial crisis, without the
help of women voters backing Clinton, Obama would not have made it into the
White House. After weeks of self-denial, Hillary Clinton realized that it
was best for the Democratic Party and, last but not least, for her own
political future, to stand firmly behind candidate Obama.
She is now a prominent member of Obama's cabinet. To appoint her as the next
“health care Tsar” would probably have been the wiser decision. Since her
husband's first cabinet, her name is strongly associated with health care
reform. She could not have turned down such a position. But because she
miserably failed under her husband's presidency may be the reason why Obama
decided not to appoint her to push through a substantial health care reform.
Tom Daschle, the incoming secretary of health and human services, has strong
credentials in that field. The problem is just that the Democrats risk to
implement a system to heavily relying on the state, creating a black hole
for taxpayers money.
Several reasons could make Hillary Clinton's appointment as secretary of
state a bad choice. Bill's foreign policy record is disastrous. Bosnia,
Somalia, Rwanda, Iraq, North Korea and Pakistan are just a few of his
foreign policy disasters. Hillary is not Bill, but she has not distanced
herself from past errors. On the contrary, she presents the
“Clinton legacy” as a part of her credentials. Let's hope that like Obama she is
able to change.
More dangerously for President Obama, in most countries ministers of foreign
affairs are the most popular members of cabinet. They normally don't have to
take unpopular decisions such as to increase taxes. They can be seen on
television shaking hands with world leaders all the time. In a worst case
scenario, she could rise in popular opinion to the point to become a
dangerous rival for Obama in four years. So far, she has presented herself
as a team player and as such could on the contrary strengthen President
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Klezmer sheet music.
Obama's top priority will be the economy. Luckily, he picked Lawrence
Summers, a former treasury secretary, to head the White House National
Economic Council. Summers said that it would be a mistake to spend
government money solely to stimulate consumer spending. Obama's $1 trillion
stimulus plan could otherwise just mean $1 trillion lost on behalf of
America's taxpayers, $1 trillion more in debt, as previous Japanese stimulus
plans have shown.
Timothy Geithner as president-elect Obama's choice to be the next secretary
of the treasury seems reasonable too. As president of the New York Federal
Reserve Bank, Geithner is well respected in the financial sector and beyond.
He supported the decision to let Lehman Brothers fail. In retrospect, this
has increased the crisis. Still, in a few years, the current crisis may be
remembered as a healthy thing. Without the cleaning up, another crisis in
the future would have been even worse. Geithner should learn the lesson and
split up giant banks such as Citigroup.
There is no capitalism without capital and a well-functioning banking
system. Oligopolies, cartels and other limitations of market forces have to
be prevented; Ordoliberals such as Röpke, Erhard and others advocated this
in Germany after World War Two.
Since the financial system is the backbone of any economy, oversight is key.
In addition, the principle of
“small is beautiful” should be applied. The world does not need gigantic banks.
Split them up into smaller entities and limit their maximum overall market
share. No bank should be too big to fail in the future; in 2008, Germany has
just taken steps in the wrong direction by allowing the fusion of two of its
largest banks. Furthermore, bankers should be liable with their personal
wealth if they violate basic rules of due diligence, as has happened in the
past by selling junk mortgages as secure securities.
Less convincing is Obama's statement that his stimulus plan will create
three million new jobs over the next two years. This sounds too much like
Let's hope that Bill Richardson as secretary of commerce will fully embrace
free trade and that Obama's anti-NAFTA and anti-free-trade rhetoric will
remain just... rhetoric.
Another dangerous idea is the vision that you can bail yourself out of the
financial and economic crisis. If the Detroit automakers have such a bright
future with a cash infusion, there will be investors out there eager to lend
them money. Otherwise, let them go down. New investors will show up, buy the
companies and hire parts of the workforce to new, sustainable conditions.
Mary Schapiro as the new boss of the SEC will have a key position in order
to ensure the proper functioning of the financial system. As far as we now
by now, the SEC seems to have failed in the past.
As for the mortgage and financial sector, my advice: split up Fannie Mae and
Freddie Mac into 1000 companies. A $5 billion mortgage company still is big
business. If one out of a thousand fails, it won't endanger the entire
system. The other half of the mortgage market, another $5000 billion, should
be split into another 1000 companies too. The Federal Government should
limit the market share of mortgage companies, e.g. to 0.5% nationwide and to
Barack Obama appointed Tom Vilsack as secretary of agriculture. He is
unlikely to do what should have been done many years ago: eliminate all
subsidies to farmers and the agricultural sector. The new president should
“blood, toil, tears and sweat”
He should not cut down the overall budget, but cut it where needed.
At the same time, he could announce a multi-billion dollar project to do the
fundamental research - made available to all companies interested - to
reach energy independence thanks to solar and other clean sources of energy
within the next ten to twenty years.
Eric Holder jr. as the new attorney general is unlikely to repeat the
mistakes of the secretaries Ashcroft and Gonzalez who were instrumental in
So far, Obama's cabinet looks reasonable, more moderate than could be
expected. Let's give the new president and his government a year or two to
show that they can govern efficiently. Worse than Bush the Torturer, that
will be difficult to achieve. For the moment, we still have hope for change
towards the better.
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Klezmer sheet music.
on January 5, 2009:
Bill Richardson won't serve as Obama's secretary of commerce. The statement by
“For nearly three decades, I have been honored to serve my
state and our nation in Congress, at the U.N., as Secretary of Energy and as
governor. So when the President-elect asked me to serve as Secretary of
Commerce, I felt a duty to answer the call.I felt that duty particularly because
America is facing such extraordinary economic challenges. The Department of
Commerce must play an important role in solving them by helping to grow the new
jobs and businesses America so badly needs.
It is also because of that sense of urgency about the work of the Commerce
Department that I have asked the President-elect not to move forward with my
nomination at this time.I do so with great sorrow. But a pending investigation
of a company that has done business with New Mexico state government promises to
extend for several weeks or, perhaps, even months.
Let me say unequivocally that I and my Administration have acted properly in all
matters and that this investigation will bear out that fact. But I have
concluded that the ongoing investigation also would have forced an untenable
delay in the confirmation process.Given the gravity of the economic situation
the nation is facing, I could not in good conscience ask the President-elect and
his Administration to delay for one day the important work that needs to be
So, for now, I will remain in the job I love, Governor of New Mexico, and will
continue to work every day, with Lieutenant Governor Diane Denish, to make a
positive difference in the lives of New Mexicans. I believe she will be a
terrific governor in the future.I appreciate the confidence President-elect
Obama has shown in me, and value our friendship and working partnership. I told
him that I am eager to serve in the future in any way he deems useful. And like
all Americans, I pray for his success and the success of our beloved country.”
The statement by president-elect Barack Obama:
“It is with deep regret that I accept Governor Bill
Richardson's decision to withdraw his name for nomination as the next Secretary
of Commerce.Governor Richardson is an outstanding public servant and would have
brought to the job of Commerce Secretary and our economic team great insights
accumulated through an extraordinary career in federal and state office. It is a
measure of his willingness to put the nation first that he has removed himself
as a candidate for the Cabinet in order to avoid any delay in filling this
important economic post at this critical time. Although we must move quickly to
fill the void left by Governor Richardson's decision, I look forward to his
future service to our country and in my administration.”