Convenient Enemes

The way you push back against what seem like heavy odds is to find a convenient enemy. (The painting is called Fisherman, by Roland Heath. From his blog, with permission.)

I've been one. It's no fun being a convenient enemy. But the convenient enemy gets no sympathy, and can be used to bulldoze through what seem like impossible problems.

More important, a President can use convenient enemies to make a larger point, and win that point, so that opponents who once appeared all-powerful become amenable to compromise or can be bulldozed.

In this President's case, his two biggest problems right now involve financial reform and energy reform. He is fortunate in that history has given him two very convenient enemies, Goldman Sachs on the one hand and Don Blankenship on the other.

I'll explain.

Republicans are re-running their health care strategy with financial reform. That is they're united in opposition, not just to a specific set of proposals but to the idea that anything can be done while Democrats are in power. The same is true with climate change legislation.

With health care, the President had to compromise-and-compromise with his entire party — even the most rigidly opposed — in order to get a bill passed over that opposition.

This time he's going to use the convenient enemies. He's going to win through because convenient enemies work both in Congress and before voters. No one wants to stand with the convenient enemies when voters go to the polls — you're likely to be hung alongside them.

Goldman Sachs.

(Image from StandupforAmerica.)

The double-dealing uncovered by the SEC in the Abacus case is fairly easy to understand. Goldman pretended it was protecting its clients, but it was really doing a sweetheart deal with an insider, hedge fund manager John Paulson,  who dumped billions of dollars worth of junk mortgages onto Goldman's clients with the firm's connivance.

It doesn't matter at this point whether a crime occurred. It doesn't matter whether the SEC wins its civil case. It doesn't matter whether the proposed Financial Reform Bill would really have prevented this.

What matters is that a convenient enemy has been created. Goldman Sachs. Paulson. (Note — Henry Paulson is not related to John Paulson, but when it comes to the creation of enemies don't let facts get in the way.)

The financial industry is based entirely on trust. There is something worse than being the target of a regulatory agency, or even of a court. That is to have your reputation trampled upon. The President now has the opportunity to not just trample that reputation, but destroy it. The Abacus case gives him the means to do it.

It's going to start raining on Goldman Sachs. It's going to get up to their waist, up to their neck. And they will look desperately for a way out. The only way out will be through support of firm rules against anyone breaking their fiduciary responsibility.

Once Goldman Sachs gets the message and supports the Obama Administration's reform bills, Republican opposition will melt like the snow. And I predict it won't take very long.

Don Blankenship

It seemed a month ago that the President had no chance to do anything regarding dirty energy. Then came Massey Coal.

The disaster at the Upper Big Branch mine, which killed 29 people, exposed a corrupt system of political intimidation from West Virginia to Washington, of regulations ignored leading to lives lost, and created a convenient enemy. 

Don Blankenship was not just a conservative. He was a leader in the movement. And he used his leadership in that movement to drive out regulators, to intimidate unions, and ultimately to see people killed in order to make himself more money.

Mine safety, and the coal economy, are complicated subjects. The only way to get through that complexity and force change is with a villain.

Blankenship makes a lovely villain. He actually delights in his role.

That's because Blankenship is not part of the old West Virginia coal aristocracy. He's not a patrician coal baron. He's a newbie. He came to Massey as a manager and worked his way to the top.

Which means he is expendable.

As with Goldman Sachs, the rain has just started to fall on this guy, and his industry. The only way to make it stop is for the industry to go around Massey and make some deals. On mine safety regulations and, ultimately, on the energy bill.

By personalizing complex subjects, by making it about the worst offenders of the past system, you spur the desire for reform among all sorts of people who otherwise would not have cared, or who could have been manipulated by opponents.

How can Republicans stand with Goldman Sachs and Don Blankenship?

They can't.

The pressure is going to rise, and they're going to retreat.