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Friday, December 11th, 2009

1. The Personal Toll TARP Exacted. Laura Blumenfeld profiled Neel Kashkari for the Washington Post – the Treasury employee and Hank Paulson confidante who presided over TARP and assisted with much of the government’s response to the bailout who is now “detoxing” from Washington by working with his hands in an isolated retreat. The piece focuses not on what happened and the enormous impact, but on the personal toll this crisis exacted on Kashkari and those around him: the heart attack by one of his top aides; the emotional breakdowns; the trouble in his marriage as he didn’t come home for days, sleeping on his office couch and showering in the Treasury’s locker room:

Thoughts tended toward the apocalyptic. During midnight negotiations with congressional leaders, Paulson doubled over with dry heaves. A government economist broke into Kashkari’s office sobbing, “Oh my God! The system’s collapsing!” Kashkari counseled her to focus on things they could control. (Minal: “So you offered her a bag of Doritos.”)

“We were terrified the banking system would fail, but the thing that scared us even more was, what would we do the day after? How would we take over 8,000 banks?”

The piece seems to ask us to feel pity for these men and women who toiled under difficult circumstances, but it seems inappropriate to feel pity for those who assume power because they also feel its heavy weight. But the piece acknowledges that Kashkari himself seeks to get back to Washington again, “Because there’s nowhere else you can have such a large impact — for better and for worse.” Lionize them for their heroic sacrifices if you will, but there is no place for pity. Those who choose to take on the burdens of power should not be pitied because it proves too weighty.

2. New Ideas. The New York Times briefly discusses the Year in Ideas. Some of the more interesting entries:

3. Obama’s Afghanistan Decision. Fareed Zakaria and Peter Beinart both tried to place Obama’s Afghanistan decision into perspective last week in important pieces. Both of them saw in Obama’s clear-eyed understanding of America’s power shades of the foreign policy brilliance that was Richard Nixon and Henry Kissinger. Zakaria:

More than any president since Richard Nixon, he has focused on defining American interests carefully, providing the resources to achieve them, and keeping his eyes on the prize.

Beinart:

Nixon stopped treating all communists the same way. Just as Obama sees Iran as a potential partner because it shares a loathing of al-Qaeda, Nixon saw Communist China as a potential partner because it loathed the U.S.S.R. Nixon didn’t stop there. Even as he reached out to China, he also pursued détente with the Soviet Union. This double outreach — to both Moscow and Beijing — gave Nixon more leverage over each, since each communist superpower feared that the U.S. would favor the other, leaving it geopolitically isolated. On a smaller scale, that’s what Obama is trying to do with Iran and Syria today. By reaching out to both regimes simultaneously, he’s making each anxious that the U.S. will cut a deal with the other, leaving it out in the cold. It’s too soon to know whether Obama’s game of divide and conquer will work, but by narrowing the post-9/11 struggle, he’s gained the diplomatic flexibility to play the U.S.’s adversaries against each other rather than unifying them against us.

Perhaps this accounts for Henry Kissinger’s appreciation for Obama’s foreign policy even as neoconservative intellectuals such as Charles Krathammer deride Obama as “so naïve that I am not even sure he’s able to develop a [foreign policy] doctrine“:

“He reminds me of a chess grandmaster who has played his opening in six simultaneous games,” Kissinger said. “But he hasn’t completed a single game and I’d like to see him finish one.”

4. The Unheeded Wisdom of Frum. It seems that almost every week a blog post by David Frum makes this list. This week, he rages at how the Republican’s “No, no, no” policy is forcing the Democrats to adopt more liberal policies (which Frum believes are worse for the country, but in the case of health care, more popular among voters):

I hear a lot of talk about the importance of “principle.” But what’s the principle that obliges us to be stupid?

5. Fiscal Imbalances. Martin Wolf in the Financial Times identifies the imbalance between America’s deficit spending and China’s surplus policy as the root of our financial imbalances in a piece this week:

What would happen if the deficit countries did slash spending relative to incomes while their trading partners were determined to sustain their own excess of output over incomes and export the difference? Answer: a depression. What would happen if deficit countries sustained domestic demand with massive and open-ended fiscal deficits? Answer: a wave of fiscal crises.

While he says both sides have an interest in an orderly unwinding of this arrangement, both also have the ability to resist:

Unfortunately, as we have also long known, two classes of countries are immune to external pressure to change policies that affect global “imbalances”: one is the issuer of the world’s key currency; and the other consists of the surplus countries. Thus, the present stalemate might continue for some time.

Niall Ferguson and Morris Schularack offered a few suggestions in a New York Times op-ed several weeks ago as to how best unwind this. I had written about it some months ago as well, albeit with a pithier take.

6. War & Peace. Obama’s Nobel Prize acceptance speech was an audacious defense of American power and ideals. If you read nothing else on this list, read this.

7. Song of the week: Pinback’s “Charborg.”

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