Market Shrugs Bank Announcement

This is when you start to worry. The Obama administration announces its determination to shore up the banks, and the market shrugs. Well maybe the market will think it over.

According to Binyamin Appelbaum the government is easing up on the banks.

The federal government will ease the terms of its investments in more than 350 financial institutions to increase the benefit of the taxpayer dollars while reducing the cost to the banks, regulators announced this morning.

"The government will ensure that banks have the capital and liquidity they need to provide the credit necessary to restore economic growth," said a joint statement issued by the Treasury Department, Federal Deposit Insurance Corp., Office of the Comptroller of the Currency, Office of Thrift Supervision and Federal Reserve.

Hmm. Things must be worse than we thought. So now the market is saying that we need more than joint announcements. We need concrete actions that demonstrate the administration’s determination to heal the credit system. Talk won’t do it.

Here’s a suggestion. Kill the stimulus bill and kill the bailout of the ten percent who can’t afford their mortgages. Before we butter up the Democratic faithful we’ve got to get the banks right side up.

You begin to see the cost of the Obama administration’s first month when it concentrated on sluicing money at its base instead of hitting one out of the ballpark on economic recovery.

The economy is, to an extent we don’t always appreciate, is a question of confidence and trust.

Yet everyone thinks that businessmen are crooks. We can thank the great political ascendancy of the last century, the progressive educated elite, for that. They have written in a thousand books and a thousand movies that businessmen are crooks and only progressive politicians really care about people.

Well, they are wrong. Business is, more than we know, built on trust. In business, you do whatever it takes to deliver good product to the consumer. And politics, as we’ve always suspected, is built on ruthless fighting and competition for the levers of power. You do whatever it takes to get elected. Notice the difference.

As the Obama administration plays out, we will see how much this fundamental misunderstanding of the nature of business and economic activity will mitigate the success of President Obama.

The problem is, of course, that when the politicians screw up, the people get to pay for their mistakes.

"A Nation of Cowards"

This week everyone’s all riled up about Attorney General Eric Holder’s “Nation of Cowards” speech.

But why? Holder is inviting everyone to have a national conversation about race. Said he:

[T]hough there remain many unresolved racial issues in this nation, we, average Americans, simply do not talk enough with each other about race.

And we are cowards for not having the courage to talk about race.

I agree, completely. But not, perhaps, in the way that the Attorney General means.

For over thirty years, ordinary Americans have been afraid to talk about race for a very simple reason. Americans want to avoid being stigmatized as racists. But why? Aren’t we all Americans? Can’t we just get along? No, senator. Because there’s a problem.

In America today, if you disagree with a liberal on race, the liberal will call you a racist. If you disagree with a liberal on women’s issues, the liberal will call you a sexist. And if you disagree with a liberal on gay rights, the liberal will call you a homophobe.

There is a reason why liberals do this. They do it to shut people up. And we let them.

So I take up the challenge issued by the nation’s first black Attorney General. I will not be cowed. I will not be silent. I will not truckle to liberals that call me racist. I will stand up to them. I believe that people should be judged upon the content of their character, not upon the color of their skin. And I believe that, in America, in the 21st century everyone should be equal under law.

I believe that:

• If you support affirmative action you are a racist.
• If you talk about “diversity” you are probably a racist.
• If you talk about “underserved communities” you are probably a racist.
• If you want to curb “hate speech” you are probably a racist.

Yes, you could say I’m mad as hell and and I’m not going to take it any more.

I notice in your speech, Mr. Attorney General that you deplore that an America with integrated workplaces is still “voluntarily socially segregated.” You recommend:

As a nation we should use Black History month as a means to deal with this continuing problem. By creating what will admittedly be, at first, artificial opportunities to engage one another we can hasten the day when the dream of individual, character based, acceptance can actually be realized.

Then you go on to say that we will need Black History until “until black history is included in the standard curriculum in our schools.”

Oh really. The reports that I get is that the schools discuss almost nothing else, unless they are talking about feminist history.

If America is socially segregated, then I suggest that government officials should stay out of it. Politicians, are after all, the masters of division. That is what they do. They get up on the hustings and they endeavor to carve out 50 percent plus one of the voters. They divide people into Us and Them. They conduct civil war by other means.

We will never solve America’s race problem until we take race out of poliltics.

And we can, because while discrimination surely still exists, it is a hurdle to jump, not an impassable barrier.

So go ahead, Mr. Attorney General. Make my day. We, the American people, woujld be delighted to stop being cowards, and instead risk our lives, our fortunes, and our sacred honor fighting against the liberal race bullies.

We look forward to the day when, after putting the nation through decade after decade of confflict over race, the average American just gets fed up with liberals and completely refuses to listen to another word on race.

We know what will happen next. It will be like a scene in a movie.

Racist Liberal (pouting): [I]f you go, where shall I go? What shall I do?

Ordinary American (shrugging): Frankly, my dear. I don’t give a damn.

The "Obama Winging It" Meme

First we hear that the Obama administration isn’t really ready for prime time. Now Karl Rove suggests that the Obamians are “winging it.”

He’s probably right. Our Democratic friends tend not to pay much attention to capitalism and the way it works, except to rail against it and propose a new intervention to correct “market failure.” Democrats like to think of themselves as the intelligent people, and like to think that they can come to Washington, apply some intelligence to the mess left by the Republicans, and then get back to the stuff they do best, which is handing out benefits to the party faithful.

They would probably be better advised to take capitalism and its development dead seriously and to make sure that they have people on their team who really have a deep understanding of markets and the modern economy. But it looks like they don’t.

So we get the stupid waste of the “stimulus” bill. We get the reckless calls for bank nationalization. And we get the Obama proposal for bailing out homeowners.

Iain Murray has looked at the Obama mortgage relief plan, and he doesn’t like it.

[P]eople who have their loans modified to help them out actually redefault for the most part. The latest figures indicate that 36% redefault after just three months, and by eight months it’s almost 60%. There is no evidence to suggest that this new mortgage restructuring plan will be any more successful.

The markets are looking for policy that will give them the confidence that we are turning the corner. The mortgage refief plan doesn’t do that. Says Murray: “Moreover, by delaying the "clean break" that foreclosure actually represents, the plan actually subsidizes harm with taxpayer money.”

Right now the M2 money supply is soaring. So you’d think that the economy should turn pretty soon. But maybe it will all go into inflation. Gold is up sharply in the last month.

The Obama administration better get its act together soon. It’s wasted precious opportunities already in the first month of office. It needs to make sure that it starts to get things right. It may not be possible to blame everything on George W. Bush, as Democrats did so well in the 1930s when they failed to get the US out of the Great Depression. “History repeats itself, first as tragedy, second as farce,” according to Marx.

Taking on the Powerful

We all know that the Fourth Estate is a keystone of democracy. We need journalists because they “speak truth to power.”

NOT.

When they talk like that, journalists usually mean criticizing the president, government, and big corporations, writes Jonah Goldberg. But the fact is that it doesn’t cost you anything to criticize traditional villains. In fact, if you criticize the president, the publicity might make you a fortune.

In fact, journalists seldom speak truth to power unless there’s blood in the water. And that’s just where politicians and local bigwigs are the targets. There’s another problem, says Goldberg:

I’ve met innumerable writers and editors who are scared, even terrified, of one or more of these groups: gays, blacks, Latinos, Asians, Jews, feminists, evangelical Christians and the handicapped.

Yes. You would think twice before speaking truth to powerful gays or powerful blacks. (But be specially careful of riling up cat lovers, warns Jonah).

Of course there is a reason why you shouldn’t criticize gays, black, Latinos, etc. They are protected groups, and they are the mailed fist of the Democratic Party. (Is it really dangerous to criticize Christians? I hadn’t noticed.)

We know why it’s dangerous to criticize protected groups. Liberals like it that way. It serves their political interests. If you can’t criticize blacks then you can’t effectively campaign against affirmative action and quotas. If you can’t criticize gays then you can’t campaign effectively for the traditional family. Liberals like it that way.

For conservatives to make progress in the culture war it is going to be necessary to develop the courage to “speak truth to power,” in other words, speaking truth to the client groups of the liberals and the Democratic Party.

It’s an issue that was raised by the industrious mice in Beatrix Potter’s Tailor of Gloucester. Who will bell the cat?

The fact is that it is going to take a few suicide volunteers to turn the tide on this, people willing to risk their career, their reputation and everything. That is the real meaning of “speaking truth to power.” Because, as we all know, if you disagree with liberals on race you get called a racist. And if you disagree with liberals on gay rights then you get called a homophobe.

Most of us will do anything to avoid that.

Stimulus: A Clash of Faith

These days we live in an age of reason. Everyone claims that their ideas about politics and economics are driven by reason and science.

But that is wrong. We live in an age of faith, an age of faith in science. Everything comes down to faith.

And that goes for economics too.

The “stimulus” bill that President Obama is signing today is an act of faith. Ever since the late 19th century a large group of the western elite has believed that capitalism is inherently unstable, and can only succeed if minutely regulated by large-minded people like themselves. We generally call these people liberals or progressives.

Against this movement is another group and another belief system, one that we call the conservative movement. It believes that by and large, if framed by appropriate laws, the free market economy can run itself subject to the fluctuations of the business cycle, and that the interventions of large-minded people usually make things worse.

In the Reagan-Bush era conservatives believe that we made the point pretty clearly that a regime of stable regulation of business, a sensible and simple tax regime, and a level playing field is the best approach to political economy.

But our liberal friends hated every moment of this period. Because their faith says that you need people like them to help the helpless. If you don’t have minute regulation of the workplace, they say, people will be brutally exploited. If you don’t give targeted groups a helping hand then these traditionally marginalized groups will never succeed in reaching the mainstream of American life.

Arguments like this don’t get settled over the dinner table. They are fundamental arguments of faith, and only the clearest and most brutal experience will ever change minds.

In my view the present “stimulus” bill is the Last Hurrah of the interventionist faith. After the Obama era is over, there will be a lot fewer people that believe in government intervention to fix the economy.

The argument against the liberal faith has been developed by many people over the years, most notably by F.A. Hayek, who argued that the “man in Whitehall” or Washington just could not know enough to regulate an economy. It has been most powerfully made by the disastrous economic record of socialism and communism (and in a short while by the Bolivarian Revolution in Venezuela).

But our liberal friends can’t bring themselves to abandon their faith in their own ability to create a better world through detailed and comprehensive government administrative programs. And so we are going to have to descend into the pit before we will get to junk their whole cruel, corrupt, wasteful, unjust, and deluded welfare state.

Learning from the Secret of FDR's Success

The conventional line on the New Deal is that FDR captured a generation with his New Deal programs. Sure, they didn’t all work, but they gave people hope.

Not exactly, writes Michael Barone. What put FDR into the pantheon of national heroes was World War II.

In 1938 the Democrats suffered a meltdown.

In the 1938 off-year elections, Democrats lost 81 House seats, 51 of them in the industrial belt from Pennsylvania and Upstate New York west to the Upper Midwest. The Democratic governors of Michigan and Ohio were defeated for re-election. The congressional district that included Flint, Mich., site of the first sit-in strike, went from Democratic to Republican; so did most congressional districts in Ohio.

The 1938 elections didn’t return the Congress to Republican control but the 81 seats that changed hands almost wiped out the 92 seats that had gone Democratic in the 1932 election.

So the Republicans were looking good for 1940. But then along came World War II and Americans decided to stick with FDR. A whole generation went to war, and found that government could get things done. Then they went home and got an education on the GI Bill. Hey, government really worked for those people, so they went to work and voted Democratic. After all, they had benefitted from government programs. They owed the generations coming after them and wanted to give them a helping hand.

So what? What does that have to do with today?

I think that the Democrats are completely misreading the American people if they think that it’s time for a New New Deal. And they are kidding themselves if they think that the American people are going to swallow the stimulus package. Today’s Americans—outside the political looter class—don’t think that government works. They don’t think that Senator Harry Reid (D-NV) and Speaker Nancy Pelosi (D-CA) are noble public servants. And they will soon start to think that President Obama is just the President of the United States and not a hope-and-change phenomenon.

The Democrats have been playing a high-stakes game with the American people. They insisted that President Bush was uniquely stupid and that Republicans were corrupt and dominated by the right. They, the Democrats, were the friends of the middle class.

That’s all fine and good. Everyone gilds the lily when running for office. But when you actually get elected you really ought to at least go through the motions of pretending that you meant all that stuff.

But no. The Democrats arrived in Washington last month thinking that they were at First and Goal rather than First Down on their own 20 yard line. So they nominated a bunch of lobbyists and tax cheats to the cabinet. So they passed a “stimulus” bill that shovels money at people already in receipt of staggering amounts of government spending. So they shoved through a partial repeal of welfare reform.

Here’s a fearless prediction. I’ll bet that very few centrist Obama voters thought they were voting for a repeal of welfare reform. They are really going to get a shock when Republicans tell them that their Democratic congressmen voted to turn back the clock on welfare.

Recalled to Life

Remember “Recalled to Life?” It comes from A Tale of Two Cities, Charles Dickens’ romance about the French Revolution. The phrase referred to Dr. Manette, imprisoned in the Bastille and now released.

For years Republicans and conservatives have felt a bit like they were imprisoned, or at least uncomfortably shackled.. The long withdrawing roar of the Bush administration and the cold-cock politics of the Democrats put decent, common-sense reform in the meat locker and sadly depressed Republican morale.

But now, in a short three weeks, the Obama administration has Recalled the conservative base to Life. In the lobbyist-fest of the Cabinet nominations, in the pork-fest of the stimulus bill, in the stealth repeal of welfare reform, we are reborn. Thank you, Mr. President, we needed that.

Now we know. There is no Hope. There is no Change. There is nothing to Believe In. It is back to business-as-usual. The Obama administration is giving the clearest signal you can give that the Democrats have not changed. In fact, they are beside themselves in pent-up frenzy after having to pretend throughout the Clinton era that they were really “new” Democrats who weren’t at all like the McGovern Democrats of the 1970s or the San Francisco Democrats of the 1980s who always “blamed America first.”

After years of patient message management and brilliant tactics the Democrats got the American people to believe that they were the party of the middle class and that the Democratic Party was a center-left party and that the Republicans were dominated by the right. You gotta say: they did a remarkable job with that message.

But now it looks like the Democrats under President Obama, Speaker Pelosi, and Majority Leader Reid are throwing off the cloak of invisibility. Underneath all that rhetoric they are liberal Democrats, and that means they believe in the neo-feudal welfare state and its huge patronage systems. They are building a land of great fiefs, vertical hierarchy, and a sea of helpless peasants.

Back in November, I voted for Barack Obama because I thought that, after four years of the Democrats in power, the American people would be ready for a Republican age of reform. Silly me. How wrong can you be?

It’s beginning to look as if the American people will be ready for Republican reform in about another month.

So I think I’ll take time this weekend to make my first contribution to Sarah Palin’s new PAC. Money, said Jesse Unruh, a California sate politician, is the mother’s milk of politics.

But isn’t this all too much too soon? Not really. Here’s the Four Step program I see in the months ahead.

1. Energize the base.
2. Start the money flowing.
3. Organize.
4. Start a conversation with the American people.

So let the games begin!