Obama Shares Wall Street's Delusions
The president, speaking in an interview, said in response to a question that while $17 million is “an extraordinary amount of money” for Main Street, “there are some baseball players who are making more than that and don’t get to the World Series either, so I’m shocked by that as well.” “I know both those guys; they are very savvy businessmen,” Obama said in the interview yesterday in the Oval Office with Bloomberg BusinessWeek, which will appear on newsstands Friday. “I, like most of the American people, don’t begrudge people success or wealth. That is part of the free- market system.”Krugman's reaction, in a blog post titled "Clueless," pretty much sums it up: "Oh. My. God." The quotes paint a picture of a president who is hopelessly out of touch with the economic reality and with the public's perceptions of Wall Street. He also seems to be experiencing some amnesia regarding the massive, taxpayer-funded bailouts that have sustained the institutions run by these businessmen. The White House has already started attempting to walk back the comments in a remarkable blog post that purports to clear up what the president "actually" said during the interview. While offering up lengthy presidential quotes about the bonuses, say-on-pay, and so forth that put some of his words in context, the post leaves out what I see as the most important quote in the Bloomberg piece, where he says (about Blankfein and Dimon): "I know both those guys; they are very savvy businessmen." It makes sense that the White House failed to address that quote, because it's virtually impossible to walk back what is conveyed by that sentence: that the President is cozy with Blankfein and Dimon, that he respects their intelligence and business acumen, and, in the context of the rest of the interview, that he thinks they actually earn their money.
Dimon and Blankfein.
To this day, the willingness of a Wall Street investment bank to pay me hundreds of thousands of dollars to dispense investment advice to grownups remains a mystery to me. I was 24 years old, with no experience of, or particular interest in, guessing which stocks and bonds would rise and which would fall. The essential function of Wall Street is to allocate capital—to decide who should get it and who should not. Believe me when I tell you that I hadn’t the first clue.It's not just a CEO issue -- the compensation problem runs up and down the ladder. Blankfein and Dimon are at the top, but their compensation is no more absurd than the six figure salaries of recent Ivy grads, who have zero experience in business, but who are employed for their knowledge of business. Read the whole Taibbi post for another humorous take.