From Nukes to Banks: How Smart is President Obama? (Matlin)

The Department of Defense has announced the deployment of Prompt Global Strike in 2014. According to the US Government, a new conventional warhead of enormous weight, delivered at high speed with precision accuracy, will destroy its target with the destructive power of a nuclear weapon but without the radiation fallout. Because the weapon is not ballistic, it will be easy to control.

Viewing America: North Carolina, Tea Parties, and the Supreme Court (Matlin)

One might think that cruise missiles would be destructive enough for our American cousins, and as for pinpoint accuracy, well, we’ve heard this before. In an episode of The West Wing, President Bartlett is urged by his Chief of Staff to go to the Situation Room to witness the result of the latest Star Wars test.


“Intervention in fifteen seconds,” the President is told by a General.

Twenty seconds later, the President asks, “Did we hit it?”

The General pauses. “Not exactly, Mr. President, one hundred and thirty eight.”

The President leans towards his Chief of Staff, whispering, “one hundred and thirty eight feet, not bad.”

“Actually, it was one hundred and thirty eight miles, sir,” comes the response.

I suppose spending loads of taxpayers dollars on the latest war toy might be justified by the administration because of the huge numbers of people employed in the American munitions industry. But why, in the face of the recent nuclear treaty with Russia, is it necessary to add a new weapon of such destruction to America’s phenomenal arsenal?

I wonder if the administration is playing really cool, getting the Russians to agree to disarm nuclear weapons on a one for one basis. “You disarm a nuclear weapon and we won’t build a GPS missile” could be the deal. If so, what a clever move it might be, especially if this new American weapon system would never have been built in the first place. No money spent and missiles deleted. Obama has demonstrated more than once that he values “smart” as much or more than “tough.”

Is Obama being smart about financial regulation as well? The Republicans in Congress object to new financial regulation rules. These laws challenge the complete freedom hitherto enjoyed by the economic elite on how they run the hedge fund industry, with the federal government seeking to introduce transparency and fairness. Obama’s point is straightforward and well-taken. He has told Wall Street, “Unless your business model depends on bilking people, there is little to fear from these new rules.” into the hedge fund market.

Republicans are protesting on grounds of “more socialism” and “denial of freedom” by the federal government. Yet not so long ago, these same Republicans were very keen to have the federal government bail out their banker friends. Then they stood mute whilst the heads of suspect financial institutions paid themselves huge bonuses, to the disgust of the American taxpayer. Whoever said “the lunatics have taken over the asylum” was right.

Who do these bankers think they are? There seems to be a parallel with the way some Premier League football (soccer) players are treated in England and the acceptance of a separate set of social rules for the sporting prima donnas. The stars can rightfully claim to entertain hundreds of thousands every Saturday as they play the beautiful game, not that this is any excuse for some pretty deplorable behaviour on their part. In comparison, however, investment bankers play their game only for the very few and can make no claim for “the beautiful deal”.

Last week, we, the taxpayer bailers of the banking system, were treated to disclosure of the kind of behaviour that got the global financial world into the disaster from which we all suffered.

In 2007, as the American housing market showed signs of weakness, Goldman Sachs, the doyen of Wall Street investment bankers, sold an investment product based on the housing mortgage market. The product was inherently bound to fail, something which Goldman knew but neglected to mention. Worse, another Goldman client and customer, John Paulson Inc., was certain to profit from the inbuilt capacity for failure of the Goldman investment. As a result, the federal government has commenced a civil suit against Goldman at the very time that the new financial laws are coming to a voting boil in Congress.

I have no doubt that within the hundreds of pages of small print attached to the investment in question, Goldman will have warned buyers that investments can result in losses, that independent advice should be sought before purchase, and probably in a few words buried deep in the documentation, that the buyer would almost certainly lose. However, it is clear to me, as someone who worked in the City of London for many years, is that Goldman has behaved unethically and, in any view, wrongly by breaching conflict of interest principles.

Goldman has already sought refuge that an individual rogue director was solely to blame, claiming that this person was working on his own. That won’t fly. Does Goldman suggests it doesn’t have a vetting process for financial products and that its lawyers don’t write the small print? Methinks this banker doth protest too much.

Still, I dislike the probability that Obama’s administration has manipulated and politicised the Goldman affair, hoping to embarrass Republican legislators into accepting the new financial regulation laws. It may be a smart move politically but this is not the right way to pass important legislation. New law should be judged on merit alone.

It has been timely for me to get away to North Carolina. Beaufort, pronounced “Bewferd,” is a jewel of a town on the Crystal Coast. Part of the Inner Banks, The town was settled in colonial times and there is much West Indian architecture to admire.

I also took a boat ride to the Outer Banks, an Oceanside wilderness which has hardly changed since the founding fathers’ time. I have seen wild horses, all kinds of bird life, dolphins and maybe a whale --- one glimpse was too quick for confirmation. The boat ride, the beauty and peace there, the restaurants --- don’t miss Amos Mosquito ---- and the sights and sounds of the coast provided a refreshing change to large American and European cities.

So while I still ponder whether President Obama, from nukes to finance, is being “smart” as well as “tough”, I do hold this clear, immutable, and unchangeable opinion: on any view imaginable, the Inner Banks and Outer Banks of North Carolina are infinitely better than all of the Wall Street banks.