Unleashing the mob
Clive Crook has an excellent column at the FT on Obama and the AIG mess. If Adam interprets Crook correctly he is concerned at Obama’s vacillation and lack of leadership. Crook points out that Obama has alternately stoked the fires of the mob and then called for calm.
Adam does not believe that those are the actions of a leader, but of an indecisive individual who does not know what to do.
This extract from Crook’s column gives the flavour, but the entire piece is worthy of a read.
Responding to an onslaught of popular protest, the House of Representatives has passed an atrocious and probably unconstitutional law, using the tax system to void contracts that its own recent stimulus bill sought to protect. Tim Geithner, the Treasury secretary, is implicated in the scandal and may yet be driven from office. The surge of anger may also cripple the long-awaited financial stability plan that Mr Geithner is about to reveal.
This plan will give an important role to private investors acting alongside the government in acquiring toxic assets. Good luck with that: the shredding of contracts and the use of the Internal Revenue Service as a bankers’ punishment squad are hardly conducive to the “partnership” the administration of Barack Obama seeks. Moreover, the government may be unable to take up the slack. The Treasury devised this scheme in the first place because taxpayers were so opposed to spending hundreds of billions more dollars to prop up the banks.
Yet propped up they must be. The US president has vacillated between stoking the outcry and trying to calm people down. He should have condemned the House’s bill of attainder. If his financial repairs are to succeed, the president must foster a more calculating, less self-destructive mood.
Adam fears that the president having unleashed the mob is not now in a position to bring it to heel.
The political use of the IRS is an extremely ominous development. That smacks of abuse of power. It is hardly transparent and fair government.
Crook points out as well that by its actions the administration has ensured taxpayers have borne all the losses by effectively guaranteeing AIG’s ‘deathwish business model’ as Crook puts it. AIG’s counter-parties have all been made whole. Yet in a true market those counter-parties would have borne some losses.
On that matter Adam will be posting later.
This blog is hosted at WordPress.com. I have enabled Akismet which is the WordPress spam filter.
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Hello, I read your blog from time to time and i own a similar one and I was just wondering if you get a ton of spam? If so how do you control it, any plugin or something you can suggest? I get so much it’s driving me insane so any help is most appreciated.
Lucy
See my most recent post ‘Chickens come home to roost ‘ on who gave the Obama campaign money
Unfortunately America is just finding out what it is like to have Socialists ruling,as Helen Clark was fond of saying (as opposed to governing). They make the rules and the laws up as they go along. We had may instances of retrospective laws that favoured the then government, breaches of the law and laws written and implemented that gave the then government an edge over there opponents and the public.
If it is true that they, the socialist government that now is in charge, have given the Chinese Eminent Domain over America in exchange for loans, loans that are so outrages that they may send the country into bankruptcy then I’m afraid there is worst to come.
Thanks for your insightful comments! Many of us in the U.S.–who were not whipped into a frenzy by President Obama’s rhetoric–are very concerned about his and the Congress’ retroactive, punitive taxes levied against specific individuals. You’re right, too: it reeks of abuse of power and has the potential to lead us down a road that we don’t want to travel. It’s a pity that Obama is such a great salesman; he will sell my countrymen a bill of goods before many of them even know what they have purchased. Unfortunately, then it might be too late to return it. Keep up the good work!
P.S. Adam Smith is one of my favorite economists, too, along with Friedrich Hayek