“You never want a serious crisis to go to waste,” said Chief of Staff Rahm Emanuel. “This crisis provides the opportunity for us to do things that you could not do before.”
Proves my point about a stimulus bill really being a spending bill. Purely an opportunity to leverage a crisis to push through an agenda that really does not address the problems at hand, but does get a particular agenda going. Under normal circumstances, this bill would have never made it throu without the proper debate requirements in congress, and that’s what troubles me. Just like George Bush with the Patriot act, we knee-jerked a reaction and we’re dealing with that hangover, as we will with this.
When the reasons for the current economic situation stems from lack of and poor banking regulation, greed, Fannie and Freddie pushed into making bad loans, corrupted bond-rating agencies, house-flippers and homebuyers who knew they couldn’t afford what they were buying, and also fly-by-night mortgage companies taking advantage of home buyers who didn’t understand what they were signing, you would think that those would be the first issues to be addressed. Instead, we have a bill that doesn’t address the root causes of the problems, but a large social program to act as a stop gap, so the problems still remain and will sooner or later have to be addressed. The fact that today, as an investor, I could still go out and buy an unregulated CDO and CDS is a problem.
Indeed, one could perversely make the case that, if anything, the proliferation of overeducated, Gucci-wearing, smart-ass MBAs inventing ever more sophisticated and opaque mathematical models and debt instruments helped get us into this credit catastrophe in the first place.
And yet with our financial house on fire, Obama makes clear both in his speech and his budget that the essence of his presidency will be the transformation of health care, education and energy. Four months after winning the election, six weeks after his swearing in, Obama has yet to unveil a plan to deal with the banking crisis.
So why has the market dropped so rapidly over the last couple of weeks. Because investors understand several things. First, nothing is being done about the root causes of the banking system. Second, they know the spending hangover is coming in the form of very high taxes, and know that will slow growth even further.
Clever politics, but intellectually dishonest to the core. Health, education and energy — worthy and weighty as they may be — are not the cause of our financial collapse. And they are not the cure. The fraudulent claim that they are both cause and cure is the rhetorical device by which an ambitious president intends to enact the most radical agenda of social transformation seen in our lifetime.
The time to address healthcare, education and energy is not now. Trying to address these without first addressing the core financial problems will only make these initiatives falter. I would like to see fair and equal access to primary, secondary and higher education, but that costs money. We need to generate wealth to create the money to pay for these programs. Healthcare is not a right, not an entitlement. But it’s in our best interest to help those who cannot afford it to get coverage somehow. That also takes money. Alternative energy. And we definitely can’t artificially inflate the costs of fossil fuels to make expensive alternatives palatable via cap and trade systems.
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