Obama One Year On - ARNIE ARNESAN (RADIO HOST AND POLITICAL COMMENTATOR) PETER SCHIFF (EURO PACIFIC CAPITAL) INTERVIEW - 8th November 2009
Yes, we can! Yes, we can! Yes, we can! "Yes, we can." It was those
three simple words that propelled Barack Obama into the US presidency
exactly 12 months ago this week. Three words that summed up his
optimistic mandate for change in the US, and, many believed, in the
entire politics of the globe. Since that eventful night, depending on
who you believe, he's been either busily delivering his ambitious
campaign pledges or is the African-American anti-Christ, leading the US
to wrack and ruin. For two apparently differing ideological views on
Obama's first year as President, George Negus got in between - well, at
least he tried to get in between - Arnie Arnesan, a dyed-in-the-wool
pro-Democrat radio host from New Hampshire, and aspiring Republican
senator Peter Schiff, the man they call 'Dr Doom' in the world of US
finance.
GEORGE NEGUS: Peter Schiff, Arnie Arnesan, thanks so much for
joining us. Arnie, if I could start with you. I could say doesn't time
fly when you're having fun? It doesn't seem like a year since Barack
Obama has been running the show in America, and some people would say
the world, but you were beside yourself when I saw you on election
night. Could I ask you this, he kept telling us, "Yes, we can. Yes, we
can." Have you?
ARNIE ARNESAN, RADIO HOST AND POLITICAL COMMENTATOR: Um, no. And I
think that is part of the problem. I mean, we have seen an $800 billion
stimulus package that produced or saved about a million jobs. While
Barack Obama wanted to produce change, the problem is he is in an
economic swamp, and you know times are bad when you see something like
a GM and a Lehman Brothers going bankrupt and AIG getting bailed out,
and Goldman Sachs rolling in executive compensation packages. So, for
Barack Obama, it has been a terribly difficult year and nothing that he
wanted to see happen, for the most part, has happened. And things that
he didn't expect, like the Nobel Peace Prize, they are kind of icing on
a cake that's not been baked yet.
GEORGE NEGUS: Peter, are you surprised to hear Arnie saying
that? Do
you think that there was ever any gloss, if you like, on Barack Obama?
PETER SCHIFF, EURO PACIFIC CAPITAL: Well, he has performed terribly. I
mean, he inherited a bad situation granted, but he repeated all the
mistakes of Bush, only on a grander scale. He continued the misguided
policy of so-called economic stimulus. The stimulus is the problem, the
stimulus is toxic, and it is killing our economy. Barack Obama thinks
we can spend our way out of this recession, that we can borrow our way
out. We can't. The only way out is to do the opposite. We have to save
more, invest more, and produce more. That's the only way out. If we
continue on this course, inflation is going to keep getting worse,
ultimately, interest rates are going to head skyward as well, and we're
going to be in an inflationary -
ARNIE ARNESAN: You can tell he's running for Senate in Connecticut.
GEORGE NEGUS: Excuse me. Other than that, you could say that
America is
looking pretty good. I mean, you obviously don't agree with Peter, but
you haven't been complimentary yourself about the way Obama is leading.
ARNIE ARNESAN: No, no. Look, look. Part of the problem is the stimulus
package was tepid at best. The problem is it's kind of like if you have
a waterfall, if the water goes up to here and the waterfall is up here,
you never really see the result. He was reluctant to be as aggressive
as he needed to be because part of Barack Obama's mindset is he tries
to make people work together. You have got a Republican Party that
knows the only one word - 'no'. It doesn't want to participate, it
doesn't want to see results, it wants Barack Obama to fail.
PETER SCHIFF: You are missing the point. The bigger the stimulus, the
more damage it is going to do to the economy.
ARNIE ARNESAN: You are absolutely wrong! That's the problem!
PETER SCHIFF: The whole concept is wrong. We can't try to encourage
Americans to spend more money - we're broke! The government can't spend
more money - it's broke! We have to stop spending. Unfortunately, we
need a recession. A recession is the cure for a disease the government
infected us with…
GEORGE NEGUS: Peter, Peter -
PETER SCHIFF: we have spent too much money. Because of low interest
rates and government programmes and subsidies and regulation, we
over-consumed as a nation and under-saved. That is the problem.
GEORGE NEGUS: Peter -
PETER SCHIFF: We now have to do the opposite. We now have to produce
more, which means we have to spend less.
GEORGE NEGUS: Can I interrupt you there? Let me interrupt you
there,
because to explain to our Australian audience, we have somebody, Peter,
who could be senator, Republican Senator Peter Schiff, if things worked
out and the planets align for you next year and, Arnie, you are known
as a Democrat supporter. And here you are, somebody, if you like, on
the left and in your case, on the right, in Peter's case in American
politics, telling me degrees of difference only about Barack Obama.
Neither of you believe that he is doing the job.
ARNIE ARNESAN: I mean, I think there is a tremendous amount of a
disappointment on the part of progressives on what he has done. He has
been so linked to Wall Street and so unwilling to make the kind of
quote unquote "change" everybody believed he was going to deliver when
he won in November. So I think there is a sense of frustration with
that, and making nice with Wall Street hasn't done much for producing
our change in the economy. And what I hear from Peter is that we are
spending, spending, spending. What I think is the difference is, is
that there are certain things we must invest in, Peter, if we're going
to see an economic change that is going to make a difference and
produce jobs. There is a difference between spending and investing. Ask
your own family. Ask your own family, Peter.
PETER SCHIFF: I agree. But, remember, investment has to come from
savings. It has to be made in the private sector. It's not going to be
made by the government. But I agree with one thing that you are saying
- Barack Obama is in bed with Wall Street, just like George Bush. He is
getting the same bad advice from people at Goldman Sachs and other
firms. You have got Wall Street and government working together to
destroy the United States. They are undermining the real economy - they
are transferring the wealth of this country to themselves. We have to
get away from this type of economy. We have to let banks fail. We can't
keep bailing out reckless people on Wall Street who drank all that
government Kool-Aid and who made bad decisions based on Fed policy.
They need to be allowed to fail.
ARNIE ARNESAN: Peter, there is a part of me that agrees with you.
George -
PETER SCHIFF: We need to clean house on Wall Street, we need to let
these companies go out of business.
GEORGE NEGUS: OK, let's get a response from Arnie.
ARNIE ARNESAN: George, there is a lot that Peter is saying that is
absolutely true and here is what's so scary. We knew last year when we
were bailing out all those banks that there was this, quote, concept of
"too big to fail". Do you realise today that the banks that are
standing are bigger? Are bigger? If they were "too big to fail", then
what did we do?
GEORGE NEGUS: I think Peter would agree with you about that.
You would
have let the banks fail, Peter, wouldn't you?
PETER SCHIFF: Yes. I would have let all those investment banks go
under. Now it's an even bigger problem, we have created an even bigger
moral hazard than the one that existed before. We can't have capitalism
where you take away the risk. You know, if you're going to have private
profit, then the people who bet wrong have to lose. And the government
has to recognise that.
GEORGE NEGUS: We could talk forever about what we call the
global
financial crisis, what you call whatever you call it in America - the
bailout, the stimulus package, whatever - but there are other areas of
American policy and life where Obama is copping stick as well. I read
one headline describing his first year as, "a year of vitriol and
rebuff at home and deadlock abroad." Now, apart from the financial
crisis, there is Afghanistan he's got staring him in the face, you have
the Middle East situation generally, he has got the whole health care
problem in America. He may have improved America's standing overseas,
but what has he actually achieved? Peter, what would you point to?
PETER SCHIFF: Well, I think he's done some things. I don't like to say
that he has achieved anything because achievement generally denotes
something positive. I mean, I think he's done a lot of damage since he
has been President. He hasn't done anything positive for the economy.
He has helped worsen the problem that he inherited. Meanwhile, he is
proposing all sorts of ways to increase our problems by further
burdening our economy with more excessive regulation that's at the
source of our problems. He wants to socialise more American
industry….
ARNIE ARNESAN: Peter, don't say that!
PETER SCHIFF: …he is socialising the housing industry, the
auto industry, the insurance industry, the banking industry. He wants
to socialise the health insurance industry. You know, the reason that
health care is so expensive is the same reason that education is so
expensive - it's because of excess government involvement.
ARNIE ARNESAN: Peter, Peter, I under –
GEORGE NEGUS: It sounds to me, Arnie, as though Peter is
suggesting
that Barack Obama is a closet socialist.
ARNIE ARNESAN: He is so far from it, and that's the problem. And the
point is what we know is that since the repeal of Glass-Steagall in
1999, we have seen so much deregulation that that was the problem. It
wasn't over-regulation, Peter. Peter, it was the exact opposite. He
became the weak link in the financial markets because of the failure to
regulate.
PETER SCHIFF: The problem was that the cheap interest rates of Alan
Greenspan and the problem was you had entities like Fannie and Freddie,
which were government entities that were guaranteeing mortgages. That
was the problem. And you have the government guaranteeing deposits.
GEORGE NEGUS: Let's talk about the future.
PETER SCHIFF: and once you let the banks take away those government
guaranteed deposits and gamble with them, you have a problem. But at
the root of the problem was the government guarantees. And that's -
because I understood what the government was doing …
ARNIE ARNESAN: George -
PETER SCHIFF: …that's why I'm one of the only people in this
country that accurately predicted everything that happened in 2008.
ARNIE ARNESAN: George, you didn't listen to me!
GEORGE NEGUS: Guys, please don't talk over each other. You
sound like a
couple of planets colliding at the moment. Let's talk future. Let's
talk future. Arnie, do you think, from your point of view as a Democrat
and an Obama supporter, even though you are a critic, is it possible
for America and, therefore, the rest of us who have to cop the spin-off
from all of that, to draw a line under 2009 and start all over again,
pretend that these last 12 months didn't even happen? What's the way to
go from here?
ARNIE ARNESAN: I think that Barack Obama has to realise is that he has
talked about consensus and bipartisanship. It ain't gonna happen! So
what he needs to do is he needs to lead. He needs to corral his
Democrats, he needs to point to the American people and explain to them
that things like health care reform are about job creation and about
creating a safety net for all Americans that will save us money, take
the pressure off business and ultimately create jobs. Peter wants to
talk about jobs, let's talk about jobs, but the government has a role
to play in this because we know that the health care system right now
is draining the coffers of everyone and making us uncompetitive. He has
to walk away from the Republicans, whose only answer is 'no' and he has
to tell the American people, "we need to resolve this, not just because
I care about your health but because I care about the underpinnings of
this economy." He has to show leadership. He has been waiting for
consensus. He ain't going to get it. Wake up and smell the coffee and
start leading.
PETER SCHIFF: The problem is, he is leading us in the wrong direction.
He is leading us over the edge of a cliff. We can't afford these
grandiose health care programs. The country is already broke - this is
just going to accelerate that. We are heading - the real economic
crisis is in front of us, it's not behind us. Before Barack Obama
leaves office, there will be a currency crisis. The US dollar will
collapse, and prices in this country for consumer goods are going to go
ballistic, and so will interest rates, and we are going to be living in
an economy with unemployment closing in on 20% and double-digit
inflation and double-digit interest rates.
ARNIE ARNESAN: No.
PETER SCHIFF: This is economic ruin that is coming and it is because of
the very policies that you are wanting Barack Obama to pursue.
GEORGE NEGUS: Peter, I know you are known throughout the land and even
here, as 'Dr Doom', but you are stuck with him, like it or lump it, for
the next three years. So, are you suggesting - you are talking as
though the US is going to go down the drain under Obama. What's the
alternative?
PETER SCHIFF: Well, it is! That's the problem.
ARNIE ARNESAN: It is not.
PETER SCHIFF: Barack Obama is pursuing the Bush agenda. That is
unfortunate. And Ben Bernanke is doing exactly what Alan Greenspan did.
We are repeating all the same mistakes because none of our politicians
want to level with the American public and tell them the truth about
the gigantic hole that their policies have placed us in. We need to go
back to real economy in this country …
ARNIE ARNESAN: Can we go to the election of just the other day?
PETER SCHIFF: … unfortunately, we have been living in a
fantasy land and we have been living off the productivity and the
savings of the rest of the world …
GEORGE NEGUS: Peter - wind yourself up, Peter.
PETER SCHIFF: …in this country, that's going to make what
happened in 2008 look like the roaring '20s by comparison.
ARNIE ARNESAN: George, look, the American people are disgusted. They
don't trust either party, except somehow they think they can turn an
economy around overnight. What was left for Barack Obama was such
enormous holes, and the problem with the holes were they hadn't even
expanded yet when he walked into office. And, so, the issue right now
is that he needs the time to fix it, but he needs a party that he can
work with and, frankly, he needs the Republicans to grow up.
PETER SCHIFF: He is making the hole bigger. How can he fix them when
he's making them bigger? He is trying to get the country to spend more
money. He is trying to get more credit for people to buy more cars and
people to buy homes. We need Americans to stop buying cars. We are
broke!
ARNIE ARNESAN: The problem right now, George, is that the finance
industry is now not investing in the American economy. They're
investing in each other.
GEORGE NEGUS: If we believe our Treasurer and our Prime
Minister, we
are the only Western country to have escaped the recession. Would you
like to migrate to Australia?
PETER SCHIFF: And I am buying stocks in Australia!
GEORGE NEGUS: Truly?
ARNIE ARNESAN: Well, and it's interesting. Have you addressed your
health care problem that we have? I'm just wondering, has your
socialism with health care undermined the Australian economy? Obviously
not, Peter. Maybe you should learn from the Australians what they
figured out how to do and replicate it in the United States.
PETER SCHIFF: A lot of countries have made the mistake of socialising
medicine. The problem in the United States is we have done something
actually worse. By subsidising the insurance industry to the extent
that we do and by making health care part of employment, we have
actually caused health care prices to go up even faster with our form
of socialism than other countries have with theirs.
GEORGE NEGUS: We could go on, clearly. It's just a terrible
shame that
that neither of you have got an opinion to jangle between you! I don't
know why we bother to invite you on the program because neither of you
have got anything to say for yourself. But thank you very much for
bringing us up-to-date with a great year for Barack Obama. Clearly, a
great year, as far as you are concerned, but we'll talk to you again.
ARNIE ARNESAN: Ciao.
PETER SCHIFF: So long.
GEORGE NEGUS: Thank you. Arnie Arnesen and Peter Schiff in
conversation. That was me, by the way - the one in the middle - looking
a bit bemused.