Obama Economic Team: “Wisdom & Ingenuity” or Hubris?

Every week brings another, massive, new bailout.

Various financial publications have come up with estimates ranging from $3 Trillion to $7 Trillion for the total amount of cash and backstop guarantees the government has hurled at problem financial institutions in just three months.

One might expect the new administration to distance itself from this reckless misadventure, but President-elect Obama has embraced and supported these measures.   He has even appointed Tim Giethner, President of the New York Federal Reserve Bank, and one of the three bailout decision-makers in the current administration, to be the next Secretary of The Treasury.


Wisdom & Ingenuity Vs Courage & Sacrifice

During a recent press conference Mr. Obama offered assurances that we’ll “get through” the economic crisis because he has confidence in:

  • “the wisdom and ingenuity  of my economic team (a group of veteran, Washington-Wall Street operatives)”
  • “the hard work, courage, sacrifice of the American people.”

So in Obama’s mind, the “wisdom and ingenuity,” the thinking, planning, and economic decision making for 300 million Americans is better managed by a dozen august officials in Washington, and then forced upon the rest of us by the government.

On the other hand, the “hard work and sacrifice” that will be required to reconcile all that ivory tower “wisdom and ingenuity” with the realities of the marketplace will, of course, fall upon us less enlightened slugs out here on Main Street.

Mr. Obama seems not to understand that this is more of the same, anti-liberty hubris that brought us to this point of economic crisis.

Politicians and government officials, attempting to be the source of wisdom and ingenuity for all of us, used laws and regulations to force mortgage lenders to issue subprime loans.  Then they empowered government sponsored Fannie Mae and Freddie Mac, to seek out sub-prime borrowers. They did this, even though there already were private sector lenders that specialized in sub-prime mortgages, putting their own resources at risk.

Now, tens of millions of Americans are suffering serious financial setbacks, and having to exhibit “courage and sacrifice” to endure misery caused by politicians in Washington.


Too Big To Fail

On a parallel track, a history of Federal Reserve and Treasury bailouts of financial institutions, over several decades, established the concept that some companies are “too big to fail.” The leaders of those companies were thus encouraged to purchase or insure risky mortgage backed securities it now appears they didn’t even understand!  Now, we the taxpayers are funding bailout after bailout of these “too big to fail” institutions, which will soon include General Motors, Ford, and Chrysler.


A Path To Disaster

America has started down a dangerous new path.  Government is rapidly becoming THE major source of capital and credit, pushing aside private sector sources. This means politicians and bureaucrats, most of whom have no relevant experience or qualifications, are beginning to use the power of government to substitute their judgment for that of entrepreneurs and investors in deciding which enterprises, products and services are worthy of the resources to start up or expand, and which are not.

President-elect Obama seems to be fully supportive of this trend and prepared to accelerate it as soon as his administration begins.  It’s time for those of us who prefer Liberty to the “wisdom and ingenuity” of elite government officials to begin demanding a halt to this madness before our nation is driven into economic stagnation and misery.


Constitutional Amendment

We have a humble proposal:  A Constitutional amendment that prohibits future bailouts.  The Constitution has never authorized these bailouts, but Congress has done them anyway.  Now, the American People must put the politicians and the Executives and managers of all businesses and financial institutions on notice: In the future they will be totally accountable for their actions and will not be given access to any government funds if their decisions bring down their companies.  No company is too big to fail.

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