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Monday, March 31, 2008

The Cooper Union Speech

posted by on March 31 at 12:08 PM

Have you heard Obama’s Cooper Union Speech? You should.

The key excerpt:

A free market was never meant to be a free license to take whatever you can get, however you can get it. That’s why we’ve put in place rules of the road: to make competition fair and open, and honest…

I think that all of us here today would acknowledge that we’ve lost some of that sense of shared prosperity. Now, this loss has not happened by accident. It’s because of decisions made in board rooms, on trading floors and in Washington. Under Republican and Democratic administrations, we’ve failed to guard against practices that all too often rewarded financial manipulation instead of productivity and sound business practice. We let the special interests put their thumbs on the economic scales. The result has been a distorted market that creates bubbles instead of steady, sustainable growth; a market that favors Wall Street over Main Street, but ends up hurting both. Nor is this trend new. The concentrations of economic power and the failures of our political system to protect the American economy and American consumers from its worst excesses have been a staple of our past: most famously in the 1920s, when such excesses ultimately plunged the country into the Great Depression. That is when government stepped in to create a series of regulatory structures, from FDIC to the Glass-Steagall Act, to serve as a corrective, to protect the American people and American business.

Ironically, it was in reaction to the high taxes and some of the outmoded structures of the New Deal that both individuals and institutions in the ’80s and ’90s began pushing for changes to this regulatory structure. But instead of sensible reform that rewarded success and freed the creative forces of the market, too often we’ve excused and even embraced an ethic of greed, corner cutting, insider dealing, things that have always threatened the long-term stability of our economic system

Partial deregulation of the electricity sector enabled (inaudible). Companies like Enron and WorldCom took advantage of the new regulatory environment to push the envelope, pump up earnings, disguise losses and otherwise engage in accounting fraud to make their profits look better, a practice that led investors to question the balance sheets of all companies and severely damaged public trust in capital markets. This was not the invisible hand at work. Instead, it was the hand of industry lobbyists tilting the playing field in Washington as well as an accounting industry that had developed powerful conflicts of interest and a financial sector that had fueled over-investment. A decade later we have deregulated the financial sector and we face another crisis. A regulatory structure set up for banks in the 1930s needed to change, because the nature of business had changed. But by the time the Glass-Steagall Act was repealed in 1999, the $300 million lobbying effort that drove deregulation was more about facilitating mergers than creating an efficient regulatory framework. And since then we’ve overseen 21st century innovation, including the aggressive introduction of new and complex financial instruments like hedge funds and non-bank financial companies, with outdated 20th century regulatory tools. New conflicts of interest recalled the worst excesses of the past, like the outrageous news that we learned just yesterday of KPMG allowing a lender to report profits instead of losses so that both parties could make a quick buck. Not surprisingly, the regulatory environment failed to keep pace. When subprime mortgage lending took a reckless and unsustainable turn, a patchwork of regulators were unable or unwilling to protect the American people.

For someone like me, a total wonk, this is enrapturing; it’s just so damn Keynesian, so compellingly capturing Minsky. It would be hard to write a clearer, more succinct or compelling dissection of our present financial fiasco.

Any person willing to make the difficult historical connections, to appropriately share the blame for the present crisis’s origins, to see and relate the ugliest truths about our present economic crisis—in the midst of a vicious campaign no less—deserves some respect.

RSS icon Comments


See, this is why Obama is so successful - he can actually explain things, as opposed to King George who can't even pitch a ball without being booed by the 80 percent of America that hates his guts.

Posted by Will in Seattle | March 31, 2008 12:14 PM

Stupid Amelicans you China betch now.

Posted by Original Andrew | March 31, 2008 12:18 PM

It is REALLY gonna suck when we get stuck with President John McCain. Having an intelligent, literate leader is worthless. We need a strong hand on the wheel!

Posted by Karlheinz Arschbomber | March 31, 2008 12:22 PM

A year ago, Senator Obama urged Sec. Paulson to pay attention to the coming subprime mortgage mess:

Posted by Peter F | March 31, 2008 12:24 PM

Seeing Obama debate McCain would be so enjoyable.

Posted by Trevor | March 31, 2008 12:27 PM

@5 It'll happen soon enough.

Posted by superyeadon | March 31, 2008 12:30 PM

@5, that would be the most enjoyable series of debates ever. I'm sure Obama would make McCain look dumb.

I wonder if he memorized this speech, like he did for his speech on race, or if he's reading a teleprompter.

I haven't heard a politician give a speech on something so high level and difficult to explain in such a long long time. Financial and economical issues are so hard to explain at a basic level, yet he can pull it off.

Posted by apres_moi | March 31, 2008 12:34 PM

So Obama is a brilliant, thoughtful, wise, and eloquent man. Yeah, yeah, yeah, OK already, Jonathan. We get it!

This is precisely why it never should have come to this. Obama should be disqualified for the presidency out of hand. The man embodies four of the things we Americans fear the most:

  1. Blacks.
  2. Miscegenation.
  3. Foreigners.
  4. And last but not least intellectuals.

From Nicholas Kristof in Sunday's NY Times:

President Bush is also the only Western leader I know of who doesn’t believe in evolution, saying “the jury is still out.” No word on whether he believes in little green men.

Only one American in 10 understands radiation, and only one in three has an idea of what DNA does. One in five does know that the Sun orbits the Earth ...oh, oops.

“America is now ill with a powerful mutant strain of intertwined ignorance, anti-rationalism, and anti-intellectualism,” Susan Jacoby argues in a new book, “The Age of American Unreason.” She blames a culture of “infotainment,” sound bites, fundamentalist religion and ideological rigidity for impairing thoughtful debate about national policies.

Oh, and if one of you Obamatons mentions that Lincoln also gave a speech at Cooper Union, I'm going to personally come over and smack you upside the head.

Posted by cressona | March 31, 2008 12:39 PM

nice to see Obama talking about the New Deal unashamedly and positively. I hope he can take the right wing criticism/hatred with as much grace and humor as FDR did, for which see his 'I welcome their hatred' speech or the 'Fala' speech

Posted by nice | March 31, 2008 12:41 PM

Ah, an intelligent, well-spoken politician. Pinch me.

No hillaretards on this post yet. Must be watching Days Of Our Lives.

Posted by wbrproductions | March 31, 2008 12:45 PM


Neither let us be slandered from our duty by false accusations against us, nor frightened from it by menaces of destruction to the Government nor of dungeons to ourselves. Let us have faith that right makes right, and in that faith, let us, to the end, dare to do our duty as we understand it.

Posted by some dude | March 31, 2008 12:46 PM

I have to say it again: This is what happens when you take a real life President (FDR) and he has a love child with a fictional President (Jed Bartlett) and have the resulting genetic mix carried full term in a strong black woman: You have Barack Obama.

And yes, I am gushing with excitement!!!

Posted by Andrew | March 31, 2008 12:47 PM

* ...that right makes might...

Posted by some dude | March 31, 2008 12:47 PM


It's hard to take that the GE will be decided with the help of dumber than dirt voters who think "Obama's a Muslim". :(

Posted by neo-realist | March 31, 2008 12:58 PM

@8 -

I hate word number two.

That word, all by itself, is fuckin racist as hell and I wish we could wipe it right out of the language like a bad linguini stain on linoleum.....

Posted by merry | March 31, 2008 12:59 PM

In other news, Hillamonster's up to her tits in predatory lenders.,0,3896712,print.story

I am really looking forward to the death of her campaign.

Posted by AMB | March 31, 2008 12:59 PM

Wow. I wonder if O's republican supporters know how progressive he is or at least is presenting himself to be.

I have always prefered him over HRC, but was never an Obama Zombie, but for a future president to explain the market and to call into question the complete enmacipation of the market is truly revolutionary as far as electoral politics go.

I have no doubt that he will be our nominee.

Posted by SeMe | March 31, 2008 1:12 PM

@17, He needs to dumb down that speech for middle America. Not everyone understands the economy even at a high school level.

If I was high school Econ teacher teaching a class full of graduating seniors who are voting this year, I'd require that they study that speech and do group projects on the topics presented in that speech.

Posted by apres_moi | March 31, 2008 1:24 PM

Sounds like BaRon Paulbama.

Posted by PJ | March 31, 2008 1:38 PM

@8 - Despite the sensationalist news coverage of Rev. Wright, et. al., race does not seem to be hurting Obama nearly as much as one might expect. On the contrary, dealing with the issue of race has done more to reveal Obama's leadership potential than anything else to date - just look at what has happened to his poll numbers since the race speech.

Anti-intellectualism may actually be the larger problem for him. But I think that Will @1 is right. Obama has an unusual gift for explaining complex ideas in a way that makes sense; he doesn't come off as an ivory-tower intellectual in the way that say, Kerry or Gore did.

I think the problem is not so much with candidates who are too smart; it's with candidates who can't explain their ideas in an accessible way. Bush and Co. have had really stupid ideas. But they've done a great job of selling them.

Posted by Morgan | March 31, 2008 1:41 PM

This guy really needs to be president. Even if not this time around, then the next, or the one after that.

Posted by Lythea | March 31, 2008 1:47 PM

I hope every Clinton voter who talks about Obama's "lack of specifics" gets a chance to read this.

Posted by Matthew | March 31, 2008 1:50 PM

Hey Erica, what's Hillary's economic dissection of the current national situation and how we got there? Linky link?

Also compare with McCain who not only knows dick about economics but also admits it freely.

Macro 101 won me over on Keynes. When you bring in all the variables, and do the math, it all seems to come down to the same, painfully simple model. One starts to think that all other economic theories have been bullshit designed to keep economists employed.

Posted by K | March 31, 2008 1:51 PM

This is part of what I've been saying; regulation has failed because regulators were unwilling or unable to do anything regulatory about it. This all comes back to who is appointing the regulators, the people in charge of the Fed etc etc. This is what I like about Obama; I don't get the feeling he will let Bernanke to remain as Chairman, nor will he appoint halfwits who don't take their job seriously or just look the other way.

I also think that you can't rely on government regulation if the system is so wholly compromised by Wall Street lobby money. The commies on this board can talk about how free markets blow because they arent self regulating, but I ask them "when has the government ever gotten balls to do anything except in extreme circumstances?" Why trust the government to do something right when they corrupted by what they are supposed to regulate?

The whole "New Deal Revisionism" is pretty hilarious as is Keynesian revisionism. Many of the particulars may have been necessary for the time and place, but look at the current budget problems of our national, state and local governments. I would argue that many of these problems are not only due to undertaxation but also due to an overspending to stimulate local economies as Keynesian Theory would dictate; pork projects. Or the refusual to adjust SS to reflect and adjust to the expected age of mortality for pensioners.

My hope is Obama can be the one that will not only rectify many of the problems in enforcing regulations on business that exist but also help reform government and many of the popular but destructive programs that subvert government's ability to act.

Posted by Bellevue Ave | March 31, 2008 2:17 PM

@K, every school of economics has something valuable to contribute to economic thought. It is when one school has monopoly on the thought of people regulating or deregulating the government that we run into problems.

The problem with Keynesian thought alone is that pretty much everything about the Phillips Curve and Keynesian thought was thrown for a loop in the early 70s.

This is the same reason why certain trading methods may work in steady markets but volatility throws the computers into fits.

Posted by Bellevue Ave | March 31, 2008 2:23 PM

"There are basically five stages in Minsky’s model of the credit cycle: displacement, boom, euphoria, profit taking, and panic."

I expect obamania will trace the same dynamic arc.

Shorter Obama: Deregulation is bad, and regulation is bad, and specifics are bad, m'kay?

Consult Krugman on HRC v BHO in this regard.

Posted by RonK, Seattle | March 31, 2008 2:49 PM

after obama's race speech, people said that it was too intellectual for general consumption which is implicitly saying that people won't support someone who says things that they don't understand. in other words, people are dumb and they will only vote for dumb people.

but look at the polls. obama got a bounce.

not only did his nuanced and smart speech on race not hurt him, it helped him.

how anyone can argue, after 8 years of bush, that people don't want a president who is smart (and smarter than them) is beyond me.

i want someone who is on top of this shit. i don't want to listen to a speech given by the president and feel like i'm listening to a 5th grade book report.

these kinds of speeches can do nothing but help obama. incompetance in government really sticks in the public's craw. iraq. katrina. all that stuff. coming off as smart and having a plan is a good thing, not a bad thing.

Posted by some dude | March 31, 2008 4:14 PM

Cressona, were you aware that Abe Lincoln, former President, also gave a powerful speech at that very same Cooper Union?

Posted by Fnarf | March 31, 2008 4:20 PM

Fnarf @28, thank you so much for that invaluable piece of information.

RonK @26: Consult Krugman on HRC v BHO in this regard.

I believe Paul Krugman is the poster child for what supporting Hillary can do for otherwise rational men.

It's remarkable the lengths Krugman goes to to back up Hills. I mean, you never hear him mention that five-year freeze on adjustable mortgage rates that she's proposing. Is there any economist supporting that one with a straight face? I guess Krugman's thinking is, if it's indefensible, then just don't mention it.

Posted by cressona | March 31, 2008 6:54 PM

@ 18 That would be a nice lofty goal, however it is unlikely that many econ teachers at the high school level understood half of what he was saying themselves....

Posted by Reality Check | March 31, 2008 7:28 PM

I have read and reread the quoted part of the speech. There's no proposed action. Yes deregulation got us into this- now what?

It's not enough to be articulate. You have to have a plan.

Posted by Big Sven | March 31, 2008 10:55 PM

Maybe UnPC can tell us if she agrees with her co-blogger and thinks Obama going back to the plantation will solve the subprime crisis.

Posted by still wondering | April 1, 2008 1:29 AM

Christopher Hitchens rips Hillary yet another one. She must have at least 6 assholes by now (not including her husband).

Why is the MSM going so easy on her?

Posted by AMB | April 1, 2008 9:09 AM

You can't run away from the truth about the Hillamonster.

Posted by AMB | April 1, 2008 9:29 AM

Man, the posting is slow.

Posted by AMB | April 1, 2008 9:30 AM

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