The political wrangling — in Congress, among our elites, and between the peons — exists IMO (guessing) only because of confidence that mainstream economists are correct. They believe that this recession (or depression) will trough late this year. No matter how rapid the decline, there is little the government can do in the next few quarters. So they maneuver for political advantage, assuming the recovery will take care of itself.
Conservatives organize tea parties to build support for their party, and vote against any action to mitigate the downturn. They plan to run in 2010 as thrift heroes! (For more on this see Are the new “tea party” protests a grass roots rebellion or agitprop?)
Liberals strive under the cover of the crisis to pass legislation unrelated to the crisis, playing the game that worked so well for FDR. But the world has changed since the 1930’s. They’re like elderly generals in 1913 reciting The 1907 British Cavalry Training Manual , unaware that the world had changed:
“It must be accepted as a principle that the rifle, effective as it is, cannot replace the effect produced by the speed of the horse, the magnetism of the charge, and the terror of cold steel.”
Liberals moronically play this game of deception in full view of the spectators, apparently believing that crisis means both danger and opportunity (perhaps having fallen for the myth about the Mandarin ideogram). In this post we peak behind the curtain of liberal thinking to see their calculations. It’s easy to do, just by reading the newspapers.
Playing these games while the world economy burns is the second major policy error of the Obama Administration (see here for the first).
- “In Crisis, Opportunity for Obama“, Wall Street Journal, 21 November 2008
- “The Great Non Sequitur“, Charles Krauthammer, Washington Post, 6 March 2009 — “The Sleight of Hand Behind Obama’s Agenda.”
- “Never waste a good crisis, Clinton says on climate“, Reuters, 7 March 2009
- Buffett on CNBC explains this as being like war — and both parties are failing to take it seriously. See the transcript.
- Afterword, and where to go for more information
(1) “In Crisis, Opportunity for Obama“, Wall Street Journal, 21 November 2008 — Excerpt (slightly paraphrased):
Therein lies the opportunity for President-elect Barack Obama. His plans for an activist government agenda are in many ways being given a boost by this crisis atmosphere and the nearly universal call for the government to do something fast to stimulate the economy. This opportunity isn’t lost on the new president and his team. Rahm Emanuel, Mr. Obama’s new chief of staff, explained to a Wall Street Journal conference of top corporate chief executives this week:
“You never want a serious crisis to go to waste. Things that we had postponed for too long, that were long-term, are now immediate and must be dealt with. This crisis provides the opportunity for us to do things that you could not do before.”
… That creates an opening through which Mr. Obama can drive a fair amount of his domestic agenda. Certainly the field is open for some immediate form of the president-elect’s middle-class tax cut to become part of a stimulus package.
By the same token, the yearning for government spending on “infrastructure” to stimulate economic activity creates an opening for the new president to push the kind of green projects that fit his call for a transition to alternative energy sources, including new kinds of mass-transit systems. And the Obama call for government “investment” in alternative energies will be easier to turn into reality if it, too, can be cloaked as part of stimulus spending.
At the same time, as thousands of additional Americans lose jobs in the recession that lies ahead, they also will lose their employer-provided health insurance and swell the ranks of the nation’s uninsured. That will add a bit of rocket fuel to the Obama call for universal health coverage. And certainly the broad dissatisfaction with the way financial markets were regulated will make it easier to rebuild regulatory structures.
(2) “The Great Non Sequitur“, Charles Krauthammer, Washington Post, 6 March 2009 — “The Sleight of Hand Behind Obama’s Agenda.” Excerpt:
The logic of Obama’s address to Congress went like this:
“Our economy did not fall into decline overnight,” he averred. Indeed, it all began before the housing crisis. What did we do wrong? We are paying for past sins in three principal areas: energy, health care and education — importing too much oil and not finding new sources of energy (as in the Arctic National Wildlife Refuge and the Outer Continental Shelf?), not reforming health care, and tolerating too many bad schools.
The “day of reckoning” has arrived. And because “it is only by understanding how we arrived at this moment that we’ll be able to lift ourselves out of this predicament,” Obama has come to redeem us with his far-seeing program of universal, heavily nationalized health care; a cap-and-trade tax on energy; and a major federalization of education with universal access to college as the goal.
Amazing. As an explanation of our current economic difficulties, this is total fantasy. As a cure for rapidly growing joblessness, a massive destruction of wealth, a deepening worldwide recession, this is perhaps the greatest non sequitur ever foisted upon the American people.
… The list is long. But the list of causes of the collapse of the financial system does not include the absence of universal health care, let alone of computerized medical records. Nor the absence of an industry-killing cap-and-trade carbon levy. Nor the lack of college graduates. 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.
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.
… 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.
(3) “Never waste a good crisis, Clinton says on climate“, Reuters, 7 March 2009 – Excerpt:
“Clinton told young Europeans at the European Parliament that global economic turmoil provided a fresh opening. “Never waste a good crisis … Don’t waste it when it can have a very positive impact on climate change and energy security,” she said.”
(4) Buffett on CNBC explains this as being like war — and both parties are failing to take it seriously
Warren Buffett on CNBC’s Squawk Box, 9 March 2009 — See pages 6 – 7 of the transcript.
BUFFETT: If you’re in a war, and we really are on an economic war, there’s a obligation to the majority to behave in ways that don’t go around inflaming the minority. If on December 7th, when Roosevelt convened Congress to have a vote on the war, he didn’t say, `I’m throwing in about 10 of my pet projects,’ and you didn’t have congress people putting on 8,000 earmarks onto the declaration of war in 1941.
So I think that the minority really do have an obligation to support things that in general are clearly designed to fight the war in a big way. And I don’t think before D-Day on June 1st you ought to have a congressional hearing and have 535 people give their opinion about where the troops should land and what the weather should be and how many troops should land and all of that. And I think after June 6th you don’t have another hearing that says, `Gee, if we’d just landed a mile north.’
JOE: You might not have fixed global warming the day after D-Day, Warren.
BUFFETT: Absolutely. And I think that the Republicans have an obligation to regard this as an economic war and to realize you need one leader and, in general, support of that. But I think that the Democrats — and I voted for Obama and I strongly support him, and I think he’s the right guy — but I think they should not use this when they’re calling for unity on a question this important. They should not use it to roll the Republicans all.
I think job one is to win the economic war, job two is to win the economic war, and job three. And you can’t expect people to unite behind you if you’re trying to jam a whole bunch of things down their throat. I would absolutely say for the interim, untill we get this one solved, I would not be pushing a lot of things that are contentious, and I also would do no finger-pointing whatsoever. I would not say, you know, `George’–`the previous administration got us into this.’ Forget it. I mean, you know, the Navy made a mistake at Pearl Harbor and had too many ships there. But the idea that we’d spend our time after that pointing fingers at the Navy, we needed the Navy. So no finger pointing, no vengeance, none of that stuff. Just look forward.
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5b. For more information from the FM site
To read other articles about these things, see the FM reference page on the right side menu bar. Of esp interest are:
- About Financial crisis – what’s happening? how will this end? (see section 7 for solutions)
- About Obama, his administration and Ameican policies today
- About America – how can we reform it?
About the policies of the Obama Administration:
- Our metastable Empire, built on a foundation of clay, 3 March 2008 — We elect leaders with vast ambitions, but can no longer afford them.
- American history changes direction as the baton passes between our political parties, 18 May 2008 – Importance of the November 2008 political landslide.
- Obama describes the first step to America’s renewal, 8 August 2008 — Obama’s statement about America may be the simple truth; this may be why so many find it disturbing.
- The evil of socialism approaches!, 22 October 2008 — Economic crisis and a leftist President. Can socialism be avoided, or is it our destined fate?
- America gets ready for new leadership (or is it back to the future?), 14 November 2008
- “What Barack Obama Needs to Know About Tim Geithner, the AIG Fiasco and Citigroup”, 3 December 2008
- Obama proposes a new New Deal – like Japan, will we burn money to keep warm?, 8 December 2008
- The transition between Imperial reigns: what will it mean for America?, 16 December 2008
- Obama opens his Administration with a powerful act that will echo for many years, 4 February 2009