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James Carville has never really impressed me as far as political consultants go; it feels like he's been living off his success in the early nineties, since, well, his success in the early nineties. But today he makes a good point about Barack Obama's communication skills. Basically, the president is a very skilled communicator, it's just that the topics he must discuss, especially regarding the financial crisis, are esoteric:
Mr Obama had a relatively easy time communicating the value of the recent economic stimulus package. After all, we know what bridges look like. We use them every day. And we know that repairing infrastructure creates jobs.The same can be said with the trickier concept of unemployment compensation insurance/benefits. We all know someone who has lost a job and needs the extra aid. We can argue about whether the ends justify the means (i.e. deficit spending) but the public can grasp the need for such a mechanism.The same cannot be said, however, about the banking crisis that has handcuffed the US and world economies. It is impossible to break the explanation of the crisis into a sound bite or image.The result is that it seems to the average American that the government is simply throwing excessive sums at banks and insurance companies. Now they read that the government is buying “toxic assets”. I do not know about you but I would rather not buy toxic anything. As someone who has prided himself on being able to reduce complex problems to simple messages, I am totally stumped by derivatives.This isn't just a problem for the president, it's also a problem for the press; watching political reporters (myself included) scramble to figure out the ways and means of high finance over the last eight months has been both entertaining and somewhat worrying. Update: This prescient 1994 article by Senator Byron Dorgan has been floating around the intertubes today and offers a relatively simple explanation of the derivatives market.
-- Tim Fernholz
