Opinion: Why New Zealanders should fall out of love with Barack Obama
1st Jun 09, 10:48am
By Bernard Hickey I had very high hopes for Barack Obama. I drank the Kool Aid and bought the 'Yes We Can' tee-shirt. He promised a change in America. He talked a very good game about reforming Washington and rooting out the policies as usual. Americans voted for a change to economic and foreign policies run by the Bush-Cheney nexus and their mates on K-Street, where lobbyists for big business hang out. The most beautiful President ever even promised not to start a trade war or turn any dispute into a trade war. I believed him. But now I don't. It's clear to me he is a liar and a fool. New Zealanders should protest his economic and trade policies at every step. Our Prime Minister John Key should use one of those precious few minutes on the phone with the gilded one to tell him to rack off with his protectionism and his bailouts. They damage America and they damage the rest of the world. The honeymoon is over. He is a liar because he promised a change to the status quo in Washington and he promised not to make the same mistakes from the 1930s that helped turn a recession into a depression. Yet he has done just that. He is a fool because he appointed exactly the wrong people to run his economic policies and has not intervened to stop them doing even more of the ruinous things started under Bush and Cheney. As recently as February 4 Obama was sweet-talking his way around the world, reassuring us that he was a free trader. "I think we need to make sure that any provisions that are in there are not going to trigger a trade war," Obama said when the EU and others complained about a 'Buy American' clause in his stimulus package. "I think it would be a mistake though, at a time when worldwide trade is declining, for us to start sending a message that somehow we're just looking after ourselves and not concerned with world trade," he said then. See more here Contrast this rhetoric with the actions two weeks ago of Tom Vilsack, the Agriculture Secretary he appointed. Vilsack announced export subsidies for over 90,000 tonnes of milk fat and butter, arguing this was a response to EU subsidies and US farmers needed it. "These allocations illustrate our continued support for the U.S. dairy industry, which has seen its international market shares erode, in part, due to the reintroduction of direct export subsidies by the European Union earlier this year," said Vilsack. "The Obama Administration remains strongly committed to the pledge by the Leaders of the Group of Twenty to refrain from protectionist measures. Our measured response is fully consistent with our WTO commitments and we will make every attempt to minimize the impact on non-subsidizing foreign suppliers," Vilsack said. Yes he actually said that. Of course any American protestations about how much they love free trade is a joke. Lobbyists for large agricultural corporations set the agenda in Washington and have regularly trumped any moves for truly free trade. Ask the Australian sugar farmers what they think of their free trade agreement or what the Vietnamese catfish farmers think of American free trade. The sugar lobbyists ensured Australian cane farmers would never export to America and the Catfish Farmers of America effectively blocked Vietnamese exports of the fish after Bill Clinton signed a free trade deal with America. See more on that here. I'm fired up about this again after seeing Fonterra's payout forecast for 2009/10 of NZ$4.55/kg last week. This was worse than economists forecasts of around NZ$5/kg and this was largely due to a higher New Zealand dollar and because the American export subsidies bombshell destabilised the market again. Fonterra is clearly and rightly angry about this American move. But the collateral damage for New Zealand from Obama's foolishness is much bigger elsewhere. Obama is trying to out-Bush Bush with the multiple bailouts for banks, insurers and car companies. His astonishing deficit spending is compounding the problem. All these bailouts and deficits are driving up interest rates globally. US interest rates are the benchmark for longer term interest rates globally, including her. It's clear now that the world's investors simply cannot lend America the trillions of dollars it needs. Therefore interest rates have to rise. That has already been passed on to New Zealanders in the form of higher 3, 4 and 5 year mortgage rates. It didn't have to be this way. But Obama made a crucial appointment early in his presidency that showed he was a fool. He appointed Tim Geithner as his Treasury Secretary. Geithner had been the Governor of the New York Federal Reserve. It was his job over the last couple of years to regulate and understand the big New York banks. He failed dismally. He is clearly too close to Wall St and his reflexive actions have been to bail out the big banks he become close to over the years. He has left the managers in charge of the banks and insurers that lost hundreds of billions of dollars. Even Obama allies such as Paul Krugman have pointed out that carrying on with the failed bailout policies of Bush was a mistake. Geithner is also widely loathed in Asia because he stuffed up the IMF's response to the Asia crisis when he was a senior bureaucrat in the IMF in the late 1990s. Those same Asian bankers now don't trust America's spend and borrow policies. This will drive the US dollar down further (and therefore the New Zealand dollar up) and increase interest rates. Yet Obama has persisted. Bailout after bailout has ensued. Barry Ritholz from The Big Picture tells the story best in his book Bailout Nation. It's clear Obama has no idea that he has gone down the wrong track or, even worse, he knows it's wrong and doesn't have the ability or fortitude to change it. He is a liar and a fool that New Zealanders should fall out of love with. I have.