No surprise to some, but a complete surprise to others I’m sure:
The Obama administration is again invoking government secrecy in defending the Bush administration’s wiretapping program, this time against a lawsuit by AT&T customers who claim federal agents illegally intercepted their phone calls and gained access to their records.
Disclosure of information sought by the customers, “which concerns how the United States seeks to detect and prevent terrorist attacks, would cause exceptionally grave harm to national security,” Justice Department lawyers said in papers filed Friday in San Francisco.
Kevin Bankston of the Electronic Frontier Foundation, a lawyer for the customers, said Monday the filing was disappointing in light of the Obama presidential campaign’s “unceasing criticism of Bush-era secrecy and promise for more transparency.”
The promise of transparency has been the most consistent casualty of the Obama administration. No bills thus far have been posted on the web 5 days prior to signing. The Treasury Department refuses to disclose how TARP money has been spent. And now this – something, as the EFF points out, which was unceasingly criticized by candidate Obama when the Bush administration was in power.
Now, that said, perhaps what the Obama Justice Department has discovered is argument the Bush administration was making at the time were valid. The case in question is an extension of the September case:
Like the earlier suit, the September case relies on a former AT&T technician’s declaration that he saw equipment installed at the company’s San Francisco office to allow NSA agents to copy all incoming e-mails. The plaintiffs’ lawyers say the declaration, and public statements by government officials, revealed a “dragnet” surveillance program that indiscriminately scooped up messages and customer records.
The Justice Department said Friday that government agents monitored only communications in which “a participant was reasonably believed to be associated with al Qaeda or an affiliated terrorist organization.” But proving that the surveillance program did not sweep in ordinary phone customers would require “disclosure of highly classified NSA intelligence sources and methods,” the department said.
It would appear the Obama Justice Department has examined the case and the evidence and, amazingly, has come to the conclusion that what the Bush administration claimed – that the taps were aimed only at al Qaeda and/or affiliated organizations – was correct, and is now defending that. They’ve also concluded that disclosure of the information involved in the case would be harmful to national security.
What I now wonder is if “secrecy” suddenly is ok? And since it is the Obama administration – the increasingly opaque Obama administration – saying the taps were used only on bad guys, are they now ok? And will that be enough to mollify those on the left who were so outraged when the Bush administration was accused of doing all of this?
And finally, I wonder if the NYT will devote the time and space to this defense of what it termed “illegal wiretapping” in the past as it did when it surfaced during the Bush administration?
“For anyone who questions why the President has offered this plan, these pledges will be the answer.”
Obama’s army of cultists is very hard at work.
Like (I assume) most other news junkies who closely followed the election, I am still receiving emails from Obama’s political action people. Much of it is aimed at getting the recipients to participate in the “Organizing for America” politicking. It has always seemed a little creepy to me because the election is over. I mean, why the endless campaign unless the real purpose is to propagandize the voters? But I also figured that my biases made it seem worse than it really is. That is, until viewing this video:
Neo-neocon provides an excellent analysis of why this sort of White House driven organizing just seems wrong. For example, she notes the rather troublesome fact that the Obama administration intends for people to simply pledge blind support to his agenda:
Some of the most disturbing things about this video are its vagueness, its focus on Obama himself in what I can only call his cult of personality, and its use of the word “pledge” (at minute :56, note the words, under “The Pledge” and next to a check box, “I support President Obama’s bold plan….”)
The vagueness comes from the fact that whatever people are pledging to support is never described in any detail whatsoever. The petition, or pledge sheet, or loyalty oath, or whatever you want to call it, is very short. It appears that each policy area—energy, health care, education—has but a single sentence describing it.
Think about this for a moment: people are blindly pledging loyalty to policies about which they know virtually nothing except the fact that Obama is behind them, and he says it’s for our own good.
Moreover, reasonable dissent from Obama’s agenda is not possible according to the training video:
The trainer gives only one reason that “the establishment in Washington” would oppose this: opposition to change. Never mind principled opposition; there is no such thing where Obama is concerned. Never mind the cost of these policies in a recession.
Never mind; just sign on the dotted line. And is anyone else as perturbed as I am by this statement: For anyone who questions why the President has offered this plan, these pledges will be the answer.
I think that definitely qualifies as creepy, biases or not.
[HT: Bird Dog]
Senator Tom Coburn’s office provides a few facts about the budget the Obama administration has submitted to Congress. Budget buster would most likely be a better description:
Total spending under this budget is $3.9 trillion in 2009, or 28% of GDP, the highest level as a share of GDP since World War II.
This budget provides $1.2 trillion in discretionary budget authority for FY 2010 and increases discretionary spending by $490 billion over 5 years. Total spending in 2009 is 28 percent of GDP.
The Democrat budget includes $2.2 trillion in mandatory spending for FY 2010, which includes Social Security, Medicare and Medicaid spending.
So there are the basics. And remember the pledge that by 2012 the deficit will be cut in half. Well, with this budget, that doesn’t mean a whole bunch in terms of what’s left in the deficit. It will still most certainly be higher than any deficit prior to this one.
Deficit is one thing, debt is another. Politicians like to use smoke and mirrors with deficit and debt, preferring to ignore debt and talk about how they’re dealing with debt. Well let’s get serious about this – the debt is what we owe, the deficit is just how much more we’re piling up.
Total National Debt Today:
Under the Democrat Budget:
FY 2010: $12.2 trillion
FY 2011: $14.3 trillion
FY 2012: $15.3 trillion
FY 2013: $16.1 trillion
FY 2014: $17.0 trillion
So now we see the bottom line. In FY 2011, we will have more debt than GDP (the US GDP is 13.84 Trillion). And, in all honesty, we don’t have to be – unless we pass this budget. You cannot spend yourself out of debt. And you cannot cure a credit problem by extending more credit.
This budget adds $4.96 trillion to the public debt by 2014. Debt will be about two-thirds of GDP for the entire budget window, and deficits will be at least $500 billion in each year of the budget window.
The Democrat Budget sets total outlays in FY 2010 at $3.53 trillion and total revenues at $2.29 trillion, for a deficit of $1.24 trillion.
This is truly the beginning of the end. And without cap and trade involved, without universal health care is factored in, just to pay for this mess, taxes are going to go up. The question is how high. And as you’ll see, it’ll be higher than the spin is spinning:
Against a baseline that assumes current law tax policy is extended, S. Con. Res. 13 raises taxes by $361 billion and allows for $1.3 trillion in additional tax increases. In addition their budget paves the way for additional tax increases from a proposed cap-and-trade tax in reconciliation.
If you’re wondering where the additional $1.3 trillion in taxation might (will?) come from, Coburn provides a little behind the scenes look at how the Democrats procedurally set up phantom funds that they can initiate through a majority vote anytime they wish to fund favored initiatives:
Deficit Neutral Reserve Funds:
The Democrat budget includes 15 “reserve funds,” which essentially “phantom spending” policy statements that allow the majority to say that they would like to fund a certain initiative. The deficit neutral requirement associated with the reserve funds typically require that taxes be raised in order to pay for the new policy initiative. If all reserve funds were to be fully enacted, total spending would increase by $1.3 trillion, financed by tax increases or spending decreases.
Welcome to “hope and change”. More debt, more spending, bigger deficit, and no end in sight.
Someone will end up paying for all of this mess, and my guess is it will be all of us – for generations.
Pro-choice advocates are up in arms about Gov. Tim Kaine’s decision to sign a Virginia bill into law:
Tim Kaine, the Virginia governor and President Barack Obama’s hand-picked choice as the head of the Democratic National Committee, infuriated abortion-rights groups Monday by signing legislation that gives abortion foes a long-sought victory.
Kaine brushed off intense lobbying by abortion rights supporters in Richmond to sign a bill that allows Virginia motorists to advertise their anti-abortion views by sporting “Choose Life” specialty license plates.
The revenue from the specialty plates would go to crisis-pregnancy centers, which many abortion-rights backers believe proslyetize against abortion and encourage women to keep unwanted children.
Do these people even know what they stand for? Their mantra is that whether or not to have a child is a choice of the mother, not to be intruded upon by the state. But in order for it to be a choice, doesn’t one of the options have to be to have the child? So then, why would they be bothered by anyone encouraging women to pick one of the choices, as long as it is left up to the mother to decide? Are they really just pro-abortion advocates (keep the choice)?
Moreover, why would they care if crisis-pregnancy centers encourage birth over abortion? Again, if the choice is legally left up to the mother, then there shouldn’t be an issue. Advocates for choosing life over abortion have just as much right to say their spiel don’t they?
Apparently, these pro-choice folks are upset not just at the message on the license plate, nor that some of the revenue raised will go to crisis-pregnancy centers, but that Kaine took this action while also serving as head of the DNC, which leads to the second bit of confusion (my emphasis):
“It is surprising that Governor Kaine would do this, but it’s all the more surprising that he would do it as chair of the DNC,” said Paulette McElwain, the president of the Virginia League for Planned Parenthood.
McElwain exchanged numerous calls with the governor’s office over the license plates and organized a grass roots effort that logged more than 2,000 calls to the governor’s staff.
“We provided him with abundant information,” she said. “We’re terribly disappointed that he decided to sign it.”
In Washington, NARAL/Pro-Choice America channeled more than 17,000 emails and 200 calls to the DNC urging Kaine to veto the bill.
“It is unfortunate that, even after receiving thousands of messages from Virginians and pro-choice activists across the country, Gov. Kaine has opted to sign a bill that advances a divisive political ideology at the expense of women’s health,” NARAL/Pro-Choice America president Nancy Keenan said in a statement.
First of all, Kaine didn’t sign the bill “as chair of the DNC” because the chair of the DNC doesn’t have that power, the Governor of Virginia does. It was in that capacity, representing the people of the Commonwealth, that Kaine signed the bill.
Secondly, what difference does it make to the Governor of Virginia what people from outside the state think about what’s on our license plates? Especially when it’s something as innocuous as “Choose Life” (would they rather it said “Choose Death”?). Seriously, why do any of their opinions matter here?
The sad truth is that it seems these protesters really are just pro-abortion. Otherwise, I just can’t understand why they’re so exercised over what should be a non-issue.
If you are inclined to accept without question that the bonuses paid to AIG employees deserve unmitigated moral indignation, as Pres. Obama and the Democrats seem to, then shouldn’t that opprobrium cut across the board? Well, I guess some animals are more equal than others:
At least four Fannie Mae executives are slated to receive more than $400,000 in bonuses each this year as a result of the company’s government-approved retention program, The Post’s Zach Goldfarb reports.
The executives include chief operating officer Michael Williams ($611,000), deputy chief financial officer David Hisey ($517,000), and executive vice presidents Thomas Lund ($470,000) and Kenneth Bacon ($470,000).
Each of these executives earned about $200,000 in retention payments last year and salaries ranging from $385,000 to $676,000.
According to the report, such bonuses are doled out depending on how integral the employee is to the companies, as approved by the FHFA:
Fannie Mae, which suffered $59 billion in losses last year, has requested $15 billion in taxpayer assistance, and has said it expects to need plenty more.
All major compensation decisions are authorized by Fannie Mae’s federal regulator, the Federal Housing Finance Agency, which created a retention program when the company was seized last September to hold on to key employees.
Under the program, employees are eligible to receive up to 150 percent of their salary in bonuses this year, but many will receive far less than that, and some might receive zero, depending on how central they are deemed to the company’s task.
Congressman Barney Frank, one of Fannie Mae’s and Freddie Mac’s biggest supporters, and Chairman of the House Financial Services Committee which oversees the institutions, was reached for comment and had this to say about whether paying retention bonuses was really necessary:
That’s nonsensical. It’s clear they made a lot of mistakes and we need to undo what they did. If they really understood what they did in the first place, seriously, they probably wouldn’t have done much of it. Secondly, when you are trying to undo something, it is often not the case that the people who did it are the ones to put in place. People are sometimes committed to not admitting mistakes. … So that argument I think is in fact almost counter, because the argument that you take the people who made the mistake and put them in charge of undoing the mistake goes against the human impulse not to admit a mistake.
Oops! Sorry, about that. The foregoing statement was from Barney Frank, but he was referring to AIG bonuses.
This morning, ThinkProgress sat down with Rep. Barney Frank (D-MA), who chairs the House Financial Services Committee and has called for the firing of AIG executives. When asked to respond to Sorkin’s claim that only AIG employees can navigate the economy out of the mess they created, Frank dismissed it as “nonsensical”
Pigs in the House indeed.
Up is down. In is out. Billions in earmarks are no big deal, but millions in “bonuses” merit extreme outrage. And now, per Speaker Nancy Pelosi, illegal aliens represent the height of patriotism, but enforcing American laws is “un-American”:
House Speaker Nancy Pelosi recently told a group of both legal and illegal immigrants and their families that enforcement of existing immigration laws, as currently practiced, is “un-American.”
The speaker, condemning raids by Immigration and Customs Enforcement agents, referred to the immigrants she was addressing as “very, very patriotic.”
“Who in this country would not want to change a policy of kicking in doors in the middle of the night and sending a parent away from their families?” Pelosi told a mostly Hispanic gathering at St. Anthony’s Church in San Francisco.
As some might say, that’s muy estúpido. But the Speaker wasn’t done:
Referring to work site enforcement actions by ICE agents, Pelosi said, “We have to have a change in policy and practice and again … I can’t say enough, the raids must end. The raids must end.
“You are special people. You’re here on a Saturday night to take responsibility for our country’s future. That makes you very, very patriotic.”
Our country? Perhaps Pelosi is unclear on the concept of illegal immigrants? Do you think she realizes that they are not part of our country?
And the idea that enforcing our immigration laws is somehow “un-American” is beyond ludicrous. Although, when you consider this is coming from the party that seems to think paying taxes is a only a patriotic duty if you aren’t working for the Democrats, then I suppose it makes sense.
In the spirit of Pelosi’s newspeak, may I just say that the Madam Speaker is clearly a thoughtful and intelligent lawmaker who is doing a fine job at her post.
[HT: HotAir HL]
No, I’m not referring to any stimulus bill, or deficit spending figures. This was no celebration of a CBO report or Obama budget figures. Instead, the House of Representatives decided that it needed to spend some time lauding that most infamous of all irrational numbers:
With the world swirling about it, the House took a moment Thursday to honor pi, the Greek letter symbolizing that great constant in mathematics representing the ratio of the circumference of a circle to its diameter.
Rounded off, pi equates to 3.14, hence the designation of March 14 as Pi Day under the resolution. Informal celebrations have been held around the country for at least 20 years, but Thursday’s 391-10 vote is the first time Congress has joined the party.
“I’m kind of geeked up about it,” Rep. Brian Baird (D-Wash.) told POLITICO. “It’s crazy, but I’m a whole lot more excited about that than congratulating the winner of last year’s Rose Bowl.
Well that’s reassuring. As long as the peoples’ representatives are happy, then we must all be happy, eh?
“It makes you realize how consequential you really are,” Rep. Bill Delahunt (D-Mass.) said with a smile.
By “you” Delahunt meant himself (“consequential” being defined as “self-important”). Unless, of course, he meant to say “inconsequential” in which case he was referring to the voters, and he was exactly right.
“We were never good at math in my family,” said Rep. John P. Murtha (D-Pa.). “I thought I was voting for p-i-e.”
Or reading and/or spelling? Hey, wait. Does Sara Lee have a factory in Murtha’s district?
That’s your congress-critters for you. only slightly less useful than Chia pets.
UPDATE: In the comments, Shark finds the silver lining: “It’s the least destructive thing they’ve done this year.”
Today, Rep. Mike Pence and Rep. Cathy McMorris Rodgers, the Chair and Vice Chair of the House Republican Conference, led a blogger conference call. The representatives stayed on point throughout the call:
- On the economy generally and on the Democrats’ budget proposal specifically, they repeatedly said the Democrats are spending, borrowing and taxing too much.
- They hammered on the Democrats’ proposal as bad for families and small businesses, including family farms. They emphasized the role of small businesses in job creation.
- They said they believed in free markets, fiscal restraint and tax relief as the keys to growth.
- To that effect, they said Senate and House Republicans would be cooperating closely to promote those messages over the next several weeks and then unveil an alternative budget proposal of their own, which they promise will be a bold, clear contrast with that of the Democrats.
I expected something along these lines, and I don’t object to the sentiment or disagree with their diagnosis of the Democrats’ budget. They’ve identified what’s wrong with the Democrats’ plan, they’ve developed a strategy for responding with their own alternative, and they want to get everyone on record as either supporting the Democrats’ messy bill or the ideal Republican vision.
The first question went to Quin Hillyer over at AmSpec, who asked how unified we can expect the GOP response to be if a Republican leader like Lamar Alexander broke to vote for the omnibus spending bill. Pence acknowledged that he and Sen. Alexander had a difference of opinion on that one, but hastened to add that Sen. Alexander had voted for all the limiting amendments and had voted against the stimulus, etc.
For my part, I asked the representatives why, in light of Republicans’ so-far unsuccessful attempts to bring “clean” Republican versions of bills to the floor for debate, their alternative budget would be different.
Rep. Pence answered that Republicans would be given the opportunity on this one. The Republican House leadership is working closely with the budget committee, and specifically with Rep. Paul Ryan, the ranking Republican on that committee. There are some limitations on how quickly they can move their alternative and get a CBO estimate done on it, but they’re going to use the interim to expose problems with the Democrats’ budget before unveiling their alternative.
Rep. Morris Rodgers said that it was important that it goes to the House floor for debate, and that they wanted the difference in approach to be clear to the American people, too.
As I said earlier, this is about what I expected – when your party is some 70 seats down in the House and retains only the most meager leverage in the Senate, having lost all credibility, you need to remind people that you at least remember what a conservative is supposed to want.
I just hope that’s not all they have in their playbook. It’s much easier to present a principled image when you’re out of power and have no sway over whether a given bill will pass.
Assurances that the GOP will remain so principled when they regain a measure of power won’t carry a lot of weight without some kind of binding commitments – changing the structure and practices of the party rather than the short-term tactics. After all, misbehavior that receded smoothly when the majority last changed hands can come back just as readily. Easy come, easy go.
Alan Greenspan has a piece in the Wall Street Journal today which essentially casts him as the Pontius Pilate of the financial crisis. Or, to sum it up rather sucinctly, “it wasn’t my fault”. You’re welcome to read through it and agree or disagree. However, the imporant point I think that should be taken from the Greenspan piece are the last two paragraphs:
Any new regulations should improve the ability of financial institutions to effectively direct a nation’s savings into the most productive capital investments. Much regulation fails that test, and is often costly and counterproductive. Adequate capital and collateral requirements can address the weaknesses that the crisis has unearthed. Such requirements will not be overly intrusive, and thus will not interfere unduly in private-sector business decisions.
If we are to retain a dynamic world economy capable of producing prosperity and future sustainable growth, we cannot rely on governments to intermediate saving and investment flows. Our challenge in the months ahead will be to install a regulatory regime that will ensure responsible risk management on the part of financial institutions, while encouraging them to continue taking the risks necessary and inherent in any successful market economy.
Those words reminded me of the quote I saw in business columnist Tom Oliver’s piece today in the Atlanta Journal Constitution:
“The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.” — F.A. Hayek
Any columnist who starts with a Hayek quote is guaranteed to get my attention. And I’ve come to enjoy Oliver’s columns. However, reviewing Greenspan’s advice and admonitions in those two paragraphs, juxtaposed against the simple and elegant truth of Hayek’s statement you find yourself back in the outback watching that big red kangaroo headed for a collision with the car. It is inevitable, there’s nothing you can do about it, they can’t or won’t hear your warnings and all you can do is watch – and cringe.
Frankly, as we watch the machinations of government and listen to their declarations, we have begun to understand that for the most part, those in charge of all of this haven’t a clue. As Oliver states:
Far from demonstrating the demise of free enterprise, this long-running, deepening recession is revealing the limitations of government.
Government, in its various yet powerful incarnations, has been offering one fix after another since August 2007.
The more the Fed and Treasury have tried, the less sure they seem and the more nervous the money makers have become.
It’s understandable that folks would look to the new administration for new ideas. So it’s harder than usual to acknowledge that the ideas are in fact pretty old and, having been tried, found wanting.
Whatever one may think about the so-called stimulus, it’s too easily deconstructed as pork and policy initiatives.
And if it’s still debatable whether to nationalize the financial industry, the move to nationalize health care, education and energy can hardly be disguised as economic recovery programs.
It is understandable that those who derive their power from government would use this recession as an excuse to further government’s reach. But they act as if government has been absent — as if they’ve been absent — from the role of regulator and legislator.
He’s precisely right – it wasn’t a problem with lack of regulation or lack of legislation. It was a lack of proper regulatory oversight and a willful decision by legislators to ignore the building crisis coupled with government distorting the market and actually incentivizing risk taking far beyond that which is prudent that led us here. And now that they have us in this position, all of them, Greenspan included, are engaged in a flurry of finger-pointing and name calling at every one but the right ones. This wasn’t a crisis which happened in just the last 6 months or 8 years. This one has been building for a while.
“The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.” — F.A. Hayek
We had Democrats in charge and then we had Republicans. Again and again.
Both endorsed and encouraged the subprime sleight-of-hand. Both appointed heads of the regulatory agencies that could’ve stopped the poison seeping through our banks’ balance sheets. Both allowed gamblers to hedge and swap derivatives on top of derivatives that no one can explain and that are proving far more debilitating than the debacle they were insuring against.
Freddie Mac and Fannie Mae became toxic assets of the government while doing the bidding of congressmen who now act like the piano players in a brothel.
The Federal Reserve proved to be anything but reserved, instead stoking a fire that burned us all.
These were not the result of idle hands of government, but rather deliberate deeds that created false markets with inflated credit while turning a blind eye to those who finance election results.
Oliver’s characterizations are dead on – and he’s nailed both the fed and the Congress. The most irritating thing to me about this whole mess, other than the obvious huge loss of wealth, is the success those who were responsible for writing the rules, laying out the playing field and calling the game are escaping both blame and punishment for what they’ve brought about. That toad Barney Frank having the chutzpa to talk about prosecuting those who were guilty of getting us in this mess still astounds me. If anyone should be undergoing such prosecution right now, it is he and numerous other congressmen and women, both past and present.
Oliver concludes as follows and I can’t help but say a hearty “amen” to what he has to say:
We periodically recoil in horror at government’s failure to protect foster children or care for veterans or the mentally ill. But then we turn around and assume government will perform better in areas more complicated.
Why does the failure of government so often lead so many to believe we need more government?
Like the hair of the dog for the alcoholic, it may calm the trembling hands for a moment but it inevitably leads to another spree and another hangover.
We’re headed into a “or worse” moment. No one in government is going to listen to Alan Greenspan’s admonitions or believe Tom Oliver’s brief accounting of the history of this crisis. Instead we’re going to see precisely the opposite happen – more regulation, more strings, more intrusion, more control. And, as Hayek said, we’ll again see “how little [men] really know about what they imagine they can design.”
David Brooks had started down the road to Damascus when he was called back into the fold by Dear Leader. His Op-Ed in today’s NYT is the result.
Most of Brooks’ offering is a rather transparent attempt to shame congressional Republicans into supporting Pres. Obama’s agenda:
The Democratic response to the economic crisis has its problems, but let’s face it, the current Republican response is totally misguided. The House minority leader, John Boehner, has called for a federal spending freeze for the rest of the year. In other words, after a decade of profligacy, the Republicans have decided to demand a rigid fiscal straitjacket at the one moment in the past 70 years when it is completely inappropriate.
The G.O.P. leaders have adopted a posture that allows the Democrats to make all the proposals while all the Republicans can say is “no.” They’ve apparently decided that it’s easier to repeat the familiar talking points than actually think through a response to the extraordinary crisis at hand.
There are myriad problems with Brooks’ line of reasoning, including many in just to two foregoing paragraphs (e.g. How much input did Republicans have into the recent legislation? By “adopted a posture” is he referring to “not having control of either the House or the Senate”?), but I wanted to focus in on a couple of points in particular.
After some platitudinous admonitions, Brooks launches into his prescription for Republicans to save capitalism:
Third, Republicans could offer the public a realistic appraisal of the health of capitalism. Global capitalism is an innovative force, they could argue, but we have been reminded of its shortcomings. When exogenous forces like the rise of China and a flood of easy money hit the global marketplace, they can throw the entire system of out of whack, leading to a cascade of imbalances: higher debt, a grossly enlarged financial sector and unsustainable bubbles.
I really don’t know what point Brooks thought he was making, but he failed miserably on any score. First of all, “exogenous forces” cannot be “weaknesses” and/or “shortcomings” with capitalism since, by definition, they come from outside that system. At best, examining such forces can be used to understand better ways of protecting capitalism from them. In the context of the entire Op-Ed piece, however, it appears that Brooks is pitching the tired line that capitalism must be reigned in so that people don’t get hurt. That’s like diagnosing the problem with house, finding termites, and then thinking of ways to protect the termites from the house.
Furthermore, Brooks cites a “flood of easy money” (which, of course, is caused by government) as an example of an exogenous force, and then lists the following “shortcomings” of capitalism: “higher debt, a grossly enlarged financial sector and unsustainable bubbles.” What do any of those things have to do with capitalism? If anything, these are once again a failure of government skewing incentives.
In fact, when the government does its darnedest to make the cost of borrowing money historically low, people would be really stupid not to take advantage of that. We all know that rates fluctuate, and that the cost of money will be more expensive when they go back up. Logically therefore, it only makes sense to borrow when the Fed turns the money spigot on and then to find some sort of an asset to grow that money in. That, of course, is what leads to bubbles as everyone has barrels of money but not as many clear ideas of what makes a good investment. Instead of taking the time to really investigate what opportunities are available, and which ones fit a particular person’s portfolio, the herd mentality takes over and we all tend to keep up with the Jones and Smiths whether that means buying tulip bulbs or a run-down house we intend to flip.
The bottom line, however, is that these sorts of scenarios start with government intervention into the market place. In addition to turning on the money spigot, the federal government was also encouraging lenders to make high-risk loans, and for the Freddie Mac and Fannie Mae to buy them up, securitize them and sell them into the derivatives market. Again, that’s all fine and dandy (until it it all goes to hell), but it has nothing to do with “weaknesses” and “shortcomings” of capitalism, and everything to do with government sticking its big fat honker where it doesn’t belong.
If the free market party doesn’t offer the public an honest appraisal of capitalism’s weaknesses, the public will never trust it to address them.
The “free market party”? Who does he think he’s kidding here? The Republicans haven’t acted like a free market party since … well … it’s been so long I can’t remember.
Moreover, I simply can’t fathom how Brooks thinks a “free market party” would ever be able to reconcile itself to joining hands with Obama on his completely anti-capitalist agenda.
Power will inevitably slide over to those who believe this crisis is a repudiation of global capitalism as a whole.
Earth to Brooks: that’s already happened. Look who the president is for crying out loud, or take the time to read your own newspaper. Each and every day we hear about how the excesses of capitalism caused this crisis, and how the “libertarian” policies of Bush (HA!) have landed us in this awful spot. Capitalism didn’t get a trial, Mr. Brooks, it was rounded up, convicted and summarily shot as soon as the latest grand experiment in government do-goodism failed (again).