Tuesday, January 26, 2010

An Anti-Populist at the New York Times??

Wow.  Who knew the NYT had an anti-populist columnist?  Excellent piece.
"So it’s easy to see the seductiveness of populism. Nonetheless, it nearly always fails. The history of populism, going back to William Jennings Bryan, is generally a history of defeat.
That’s because voters aren’t as stupid as the populists imagine. Voters are capable of holding two ideas in their heads at one time: First, that the rich and the powerful do rig the game in their own favor; and second, that simply bashing the rich and the powerful will still not solve the country’s problems.

Political populists never get that second point. They can’t seem to grasp that a politics based on punishing the elites won’t produce a better-educated work force, more investment, more innovation or any of the other things required for progress and growth.

In fact, this country was built by anti-populists. It was built by people like Alexander Hamilton and Abraham Lincoln who rejected the idea that the national economy is fundamentally divided along class lines. They rejected the zero-sum mentality that is at the heart of populism, the belief that economics is a struggle over finite spoils. Instead, they believed in a united national economy — one interlocking system of labor, trade and investment.

Hamilton championed capital markets and Lincoln championed banks, not because they loved traders and bankers. They did it because they knew a vibrant capitalist economy would maximize opportunity for poor boys like themselves. They were willing to tolerate the excesses of traders because they understood that no institution is more likely to channel opportunity to new groups and new people than vigorous financial markets.

In their view, government’s role was not to side with one faction or to wage class war. It was to rouse the energy and industry of people at all levels. It was to enhance competition and make it fair — to make sure that no group, high or low, is able to erect barriers that would deprive Americans of an open field and a fair chance. Theirs was a philosophy that celebrated development, mobility and work, wherever those things might be generated."

Saturday, January 23, 2010

It's the FIRST Amendment!

Dear Mr. President -

I thought an ex-professor of constitutional law would be familiar with the 1st Amendment? Do you not understand it or do you not respect it? Either way simultaneously disrespecting both the Constitution and our Supreme Court is amateur at best, frightening at worst.


Thursday, January 14, 2010

We Need More Mirrors In The Capitol

In trying to justify the “financial crisis responsibility fee" I wrote about yesterday, Mr. Freddie Mac and Fannie Mae himself, Barney Frank, said the following to the AP:
“Look, the financial institutions collectively, particularly the larger ones, caused problems by their errors — their errors of judgment, their irresponsibility, in some cases their skating around dishonesty," said House Financial Services Committee Chairman Barney Frank, D-Mass.

"I think it is entirely reasonable to say that the industry that, A, caused these problems more than any other and, B, benefited from the activity, should be contributing," he said.
Did they remove all the mirrors from the Capitol?

Congress, and it’s errors of judgment and irresponsibility in requiring Freddie Mac and Fannie Mae to purchase more and more low-income mortgages with lower and lower borrower requirements, is the root cause of the crisis. Without this push from Congress, lending standards wouldn’t have been abandoned, fewer people would have been able to purchase houses, prices would not have increased as fast and without a bubble, there would be no bust. I concede it’s a simplified argument, and others had their role to play (Fed, credit rating agencies, etc.), but given the time I have to write this, it the quickest way to the facts.

Perhaps we should impose Congress with a special levy to help repay the taxpayers? While we’re at it, let’s impose a special tax on every individual who took out a mortgage they couldn’t afford – after all, isn’t that really the root cause of all of this? A lack of personal financial responsibility? No, of course not, it’s not politically viable to blame Americans for their poor/unlucky individual decisions, let’s go after the big bad banks instead. The same big banks who are doing more to create jobs and growth by providing capital to those who need it (and can actually repay it) than any stimulus the government could ever provide.

Look, I’m not saying the Banks didn’t play a role in the crisis, but to place 100% of the blame, and 100% of the responsibility for bailing out the Administrations (both Bush and Obama in this instance) decisions to save AIG, and the GM & Chrysler unions, is wrong, and sets a terrible precedent. It’s an outright grab of private property for no other reason than it’s there to be taken.

It’s a slippery slope. Who’s next? Fast food restaurants or grocery store chains for making the country fat? Yep. Auto manufacturers for causing car accidents? Actually, no because the auto unions have bought and paid for their protection through their contributions to the Obama Administration. Dell or Microsoft for providing hardware and software to individuals who might use it to commit online fraud? Individuals with names longer than 20 characters because the government spends more money on ink for them when printing various forms and documents?

Seriously, where does it end?

Wednesday, January 13, 2010

Changing the Rules After the Game is Over...Again

Let’s assume for a moment that you were concerned with your short-term finances and went to your Bank and took out a one year loan to temporarily boost your cash flow.  After 6 months, your financial situation has settled down so you decide to repay your loan balance in full, including interest.  Well done, back to business as usual.

Now, what if that Bank came back to you two years later and said that they were charging you a fee/levy/tax for taking out that loan two years ago and that the fee/levy/tax was required in order to make the Bank whole for bad loans it made to borrowers who were not as responsible as you and have not yet repaid their loans?  

Or what if the purpose of that fee was to help the Bank meet its yearly budget targets?  Or worse yet, what if it was required to help the Bank support the bloated benefits and pension due to its unionized employees?    

Well, that’s exactly what Barack Obama is allegedly planning to do to the 20 top Banks who participated/were forced to particiapte in the TARP program.  By claiming that these Banks benefited from the TARP program, he’s trying to justify an additional fee/levy/tax that they must pay to ensure that the TARP program remains deficit neutral - i.e. to help pay down the enormous deficits that have exploded by runaway Democratic spending on everything from non-simulative stimulus packages to health care “reform”.

The details are sketchy at best at the moment, but Obama undoubtedly sees the populist window of opportunity, and will do his best to capture that opportunity and squeeze revenue from a very unpopular industry.  Leading up to the mid-term elections it will be very difficult, politically, for any congressman/woman to vote against a bill that punishes the big bad Banks.  Nobody wants to be seen as being in bed with the “fat cat bankers,” regardless of the dangerous and anti-capitalist precedent this policy would set.

The real kicker is that most, if not all, of these 20 banks will have already paid back their loans in full, with interest, and in many cases, a lucrative kicker relating to the warrants they sold the Treasury.  Treasury Secretary Geithner himself said in December that the government stands to make a “healthy profit” on the money paid out from TARP.  Why then do these firms need to pay even more?  Because they made a profit? Because TARP was used to fund the ill-advised AIG bailout (which may eventually get paid back since AIG is actually a viable business)?  Or worse yet, because it was somehow justified to help bail out GM and Chrylser (er, their unions) with TARP funds – funds the government will never, ever see again?    

This shouldn’t surprise anyone as this administration has proven time and time again that they are ready and willing to change the rules in their favor whenever it suits them.  And we wonder why business investment and hiring hasn’t picked up.

Tuesday, January 12, 2010

Beginning of the End of Politicizing Race?

The focus on Harry Reid’s “unfortunate” comments about the candidacy of Barack Obama is, as it always is with matters such as this, extremely overblown. That said, if Mitch McConnell had said the exact same thing I’m pretty sure Nancy Pelosi, Chuck Schumer and Keith Olbermann would spontaneously combust simultaneously like Spinal Tap drummers.

If we need proof that Reid is over his head as Senate Majority Leader, I’d prefer to focus on the numerous other “unfortunate” quotes or votes by Mr. Reid that have very real impacts on the lives and safety (see his quote on Iraq in 2007) of Americans.

However, given the response by various leaders, black, white or otherwise, hopefully this could be the beginning of the end of politicizing race (wishful thinking, I know). Ward Connerly (chairman of the American Civil Rights Coalition and author of "Creating Equal") expressed this perfectly in his recent column in the WSJ

“Mr. Reid personally called President Obama and a handful of presumed leaders of the so-called African-American community—Julian Bond, Al Sharpton and Jesse Jackson among them—to beg forgiveness for his racial sin.

To no one's surprise, all of those to whom apologies were extended responded by accepting Mr. Reid's apology and saying that the nation had more important issues to deal with, such as health care and national security.”
He concludes as follows:
"We are too quick to take offense about race when none was intended. Some are too anxious to manufacture outrage over matters that do not justify the attention that we give them. And we are too quick to politicize race.

As far as I'm concerned, Messrs. Bond, Sharpton, Jackson and a host of other Americans formerly identified as "negroes" have forever forfeited the right to be outraged whenever a Republican or a talk show host makes an inappropriate or "insensitive" racial comment.”
It will be very interesting to see the reaction next time a conservative makes an “insensitive” racial comment. Will we see the traditional outrage filled with racist labels and demands for resignations, or will it go away with an apology?