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Perdido 03

Tuesday, January 25, 2011

Obama Favors Crony Capitalists And Crooked Bankers

From Charlie Gasparino at the NY Post:

The naming of General Electric CEO Jeff Immelt to head the new Council on Jobs and Competitiveness is supposed to show the country that President Obama really is serious about dealing with the nation's economic woes through the free market system, rather than the government programs and handouts that characterized his first two years in office.

Except it doesn't.

Sure, Immelt brings a lot of business experience to the post -- he's spent many years in the trenches of one of the world's biggest companies, and his last 10 as its CEO. Problem is, this isn't necessarily the kind of experience needed to deal with "jobs and competitiveness."

Rather, Immelt's selection underscores the inherent flaw in Obamanomics: It favors the crony capitalists at the banks and large corporations that feed off government bailouts and contracts at the expense of entrepreneurs and small businesses, who in the past have pulled the nation's economy out of recession and created jobs.

GE has seen some of its darkest days under Immelt. Since he replaced the iconic Jack Welch as head of the manufacturing/financial services conglomerate, the stock has fallen significantly, despite a more recent recovery.

Some of that can be attributed to timing; Immelt took over just before 9/11 and inherited a flailing stock price that never quite made it back to the highs achieved under Welch (highs undoubtedly bolstered by the late-'90s stock-market bubble).

But in the '08-'09 financial crisis, Immelt's GE was nearly decimated as its financial-services unit threatened to bring down the company. The once-mighty firm had to fall in line with the rest of the financial industry and accept a federal bailout.

When Obama took over, with his lofty "social justice" and environmentalist goals, a beaten and bruised GE became one its best corporate partners -- advocating policies that would make the US economy more like Europe's and supporting the talk of "green jobs" miracles and the wisdom of taxing energy use.

It paid off for GE, in the form of huge government contracts and other subsidies -- which, coupled with the bailout guarantees, helped the company survive and then thrive.

Despite all of this, friends of Immelt tell me he's a registered Republican who voted for John McCain in 2008, a staunch free-marketeer who wants to move Obama away from redistributionist policies.

One person close to Immelt told me he has plans to transform Obama from "community-organizer-in-chief" into the country's "chief marketing officer," selling the US economic brand across the globe.

Thing is, Immelt has been a fixture at the anything-but-free-market White House all along. Since early 2009, he's served on the president's Economic Recovery Advisory Board, chaired by the recently retired Paul Volcker, and said not a negative word publicly about the president's policies, from the $800 billion "stimulus" program to the absurd push to socialize health care when the economy was bleeding jobs. How is promoting Immelt to head of the (renamed) board supposed to change anything?

Plus, he's famous for having remarked "We're all Democrats now" after it was disclosed that GE, with his close ties to the administration, was feasting off of government contracts.

Back when GE was majority owner of CNBC (and I worked for the network), Immelt showed his allegiance by calling a meeting of top network talent to discuss whether coverage of the administration's left-leaning eco-

nomic policies was too negative. People who were present told me that Immelt didn't wind up overtly pressing for any change in coverage; he didn't have to, because his message was clear.

The president's message is clear, too. Crony capitalists like Immelt -- or William Daley, the new White House chief-of-staff and a former top executive at JP Morgan (another bailout winner) -- will be calling the shots.

The White House won't say what rules it has to prevent Immelt from using his appointment to get even more business for GE, but Immelt's spokesman says unabashedly that the CEO has no plans to back away from GE's government-serving business model and will continue to lobby the administration he's now a part of for business -- "as long as he's transparent," adding that he "doesn't intend" to use his role on the council for business purposes.

All of which might be good for Immelt's GE -- but it's hardly the cure for the joblessness and other economic problems facing the country.

For that, the president might seek advice from someone who actually created something -- rather than a guy whose claim to fame is knowing his way around the White House.

Can anybody see what has changed since Bush?

I can't.

Crony capitalists and crooked bankers still have all the influence.


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