Disillusioned on Wall Street

I can't say I know much about the psychology of the typical stock analyst or bond trader, so I've been as bewildered as anyone when I see stories quoting denizens of Wall Street complaining about the Obama administration. Not about, say, the creation of the Consumer Financial Protection Bureau—that's not surprising, since it's an agency created to rein in their abuses, and so it directly impinges on their financial interests—but about how their feelings have been hurt. After Wall Street gave more money to Obama than to John McCain, these days those masters of the universe feel put upon. As former Prospect writer Nicholas Confessore wrote in the New York Times Magazine about a discussion an Obama representative had with some of them not long ago, "They felt unfairly demonized for being wealthy. They felt scapegoated for the recession. It was a few weeks into the Occupy Wall Street movement, with mass protests against the 1 percent springing up all around the country, and they blamed the president and his party for the public’s nasty mood. The administration, some suggested, had created a hostile environment for job creators."

The natural response one has to this, of course, is "Cry me a frickin' river." You destroyed the American economy then got bailed out by the taxpayers, and your feelings are hurt because Barack Obama once used the term "fat cats" in an interview? You're shocked that all American's don't understand that every time a derivatives trader buys a Ferrari, an angel gets her wings? And you expected Obama to help the public understand that? Please. As Noam Scheiber points out, these guys may be very clever when it comes to creating intricate webs of collateralized debt obligations, but they don't understand the first thing about politics:

As sophisticated as they are about financial markets, they have a remarkably crude sense of the constraints a president faces, and the extent to which a president—even the most earnest and well-intentioned—can wriggle out of them. A lot of these donors—especially the hedge fund managers—were new to politics. Obama was the first politician they fell for. The source of the attraction was that he didn't seem to observe the laws of politics.

I personally encountered this while writing my recent book. I’d talk to a financier who'd supported Obama and had recently sent the administration a perfectly compelling proposal for fixing the banks or solving the housing crisis. The person would fume that the White House refused to consider the idea because it would cost trillions of dollars and was a nonstarter in Congress. When I’d point out that these were valid concerns, the response was inevitably along the lines of: He can get it done if he just makes his case to Congress or the country.

Now, I happen to believe the president could have been bolder in his first term. But, like most people reasonably acquainted with politics, I understand that the White House has to make realistic assessments of what's possible. I was disappointed but hardly shocked when Obama played it safe. My Wall Street sources, on the other hand, were often completely disillusioned. As if the refusal to put out a trillion-dollar housing plan unmasked Obama as a fraud.

I remember hearing a story somewhere (can't vouch for its veracity) about Harry Truman saying that when his successor, Dwight Eisenhower, was about to take office, he was in for a rude shock. Being a general, Eisenhower was used to delivering orders, which would then promptly be carried out. But once he became president, he'd give orders, and nothing would happen. And that's the thing about politics: doing anything requires the cooperation of a lot of other actors. Defeating the other side often means not actually just pummeling them into the dust, but putting them in a position in which they have no choice but to to go along with you. That means that force of will is never enough. It's often important, and courage and determination matter, but they're never enough by themselves. I'd guess that particularly for people who see themselves as badass, take-the-bull-by-the-horns sort of fellows whose own success comes from their competitive fire as much as their enormous smarts (whether justified or not, I'm guessing that's how many think of themselves), the idea that the president could be constrained by this web of other people and interest groups and factors outside his control just seems absurd. But it's true.

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