Washington is operating today as if we have been conquered by a foreign power that has suspended our democracy and doesn’t care what the American people think.
(Page 3 of 3)
The common sense, responsible regulation President Obama says he wants to prevent such economically destructive financial crises in the future would be the opposite of his regulatory overkill, permanent bailout socialism. The President’s current course will only drive the financial community overseas, where health insurance and the world’s best health care are headed, adding further to the decline of America.
Beneficial, pro-growth, financial regulatory reform would begin with repeal of the Community Reinvestment Act, along with the breakup and privatization of Fannie Mae and Freddie Mac. Fundamental reform of the Federal Reserve is also necessary, tethering it to a price rule for monetary policy focused on stable prices and a strong dollar. That will prevent financial bubbles and short circuit the boom and bust business cycle.
Then we need a permanent end to bailouts, TARP, and too big to fail, not the institutionalization of these anti-market policies. As David John explains in a recent Heritage Foundation study, Congress needs to modernize bankruptcy laws to enable the rapid, expedited closure of large, failing financial firms. Bankruptcy courts with long developed expertise and legal precedent could then act outside of political influences. Appointed receivers and conservators could continue operation of still viable components of firms until they can be sold, close and liquidate portions that are not viable, and distribute available resources to creditors under long established rules. Creditors can be given equity in place of their debts, displacing current shareholders, to the extent necessary. This would all be done without any public taxpayer funds. Creditors and buyers of the viable assets would advance any necessary capital.
Another essential reform component is stronger, enforced, capital and liquidity requirements, which would prevent overleveraging and provide a bigger cushion for financial firms. Reforms should also require legally enforceable derivatives contracts to be traded on public exchanges, where the prices, terms, and components of the derivatives would be transparent and publicly known. A truly brilliant column by Gordon Crivitz in Monday’s Wall Street Journal explains the value of even “synthetic” derivatives, which are just bets on market trends with no underlying substance, in transmitting price information signaling market developments faster and sooner. Such derivatives traded on transparent public exchanges would have signaled housing bubble and financial crisis troubles much sooner.
Franklin Roosevelt Obama
But can you see what President Obama is thinking? He is patterning his presidency after Franklin Roosevelt in the 1930s, who similarly demagogued Wall Street over the Depression, and built a political machine that lasted a generation. You can see this pattern as well in the retro Keynesian stimulus, the economically counterproductive tax increases on the “rich,” his health insurance company demagoguery, and elsewhere.
But as the saying goes, “History always repeats itself, the first time as tragedy, the second time as farce.” And farce is where we are right now with the Obama Administration, both economically and politically. For this is a different world now from the 1930s, and the American people are far more sophisticated, with far broader media outlets for alternative opinion, and far stronger intellectual infrastructure behind that opinion in the think tanks and elsewhere. America did not vote for Obama and the Democrats because we wanted to go back to the 1930s. Rather, voters were thinking of the prosperous 1990s. And since Obama is not taking us there, America will now turn to the Republican Congressional majorities of that time to do it. Can you say President Newt Gingrich?
A man of faith in a godless age is hitting Americans where it hurts.
Mr. and Mrs. American Spectator Reader, let P.J. O’Rourke talk sense to your kids.
In Britain, defending your property can get you life.
The debacle of this president’s administration is both a cause and a symptom of the decline of American values. Unless Congress impeaches him, that decline will go on unchecked. An eminent jurist surveys the damage and assesses the chances for the recovery of our culture.
It won’t take long for conservatives to scratch this presidential wannabe off their 2008 scorecard.
The American Christmas, like the songs that celebrate it, makes room for everybody under the rainbow. Is that why so many people seem to be hostile to it?
Was the President done in by the economy, or by the politics of the economy?