Beware the Encroaching D.C. Leviathan

[deejaydana]

Is this the beginning of the end for capitalism? Perhaps not, but these are scary times indeed for the economy, for the small business owner, and for taxpayers everywhere. How much gov't will we have in our lives 10 years hence? I think as Americans we may be more vigilant than other countries in our general distrust of gov't and in our 'go it alone' spirit. The question remains, once gov't encroaches, can its creep ever be turned back?

Congress: The spectacle of the very same people responsible for one of the nation's great financial calamities angling to be given even more control to fix the problem would be funny if it weren't so tragic.

Rep. Barney Frank, the Democrat who sits atop Congress' efforts to deal with the financial crisis, has enough chutzpah for 100 politicians — which is saying a lot.

In comments before testimony from both Treasury Secretary Tim Geithner and Fed chief Ben Bernanke Tuesday, Frank said he wants to regulate pay on Wall Street — even for companies that aren't getting bailouts.

And he called retention bonuses — a time-honored practice on Wall Street and elsewhere in America in which key employees are compensated for their enormous value — "extortion" and "bribes."

Frank, one of the chief architects of the housing mess that's brought us so low, isn't satisfied merely with pretending he and his Democratic pals aren't to blame for all this. No, exploiting voter anger over the now-infamous AIG bonuses, he also wants to dictate to American capitalism what it can earn and what it can't.

This is the kind of thing that normally happens in Third World countries ruled by tinhorn dictators, or in fascist states, where the democratic rule of law has collapsed. Not the U.S.

Yet, that's where we find ourselves today, isn't it? Democrats in Congress, who steadfastly rejected virtually all efforts to reform Fannie Mae and Freddie Mac as they went on the wildest, most irresponsible lending binge in the history of finance, now pose themselves as the saviors of fallen capitalism.

The hypocrisy is nothing short of stunning.

Take Frank. As we've written before, he spearheaded congressional Democrats' efforts in 1992, 2000, 2002, 2003 and 2005 to block reform of Fannie and Freddie.

Those two "government-sponsored enterprises" were the nexus of this crisis, holding $5.4 trillion of the $12 trillion in U.S. mortgages, while originating or funding 90% of the subprime market.

Their failures presaged the subsequent financial meltdown from which we're still trying to regain our economic footing.

Then there's Sen. Chris Dodd of Connecticut, another posturing moralist in the flap over AIG bonuses. He turns out to have inserted the bonuses into the bailout legislation in the first place.

An innocent move? Please note Dodd was No. 1 on the list of recipients of AIG's political contributions. Also that his wife was a former director of IPC Holdings, a company controlled by AIG.

We wish all this tinkering with the private sector was limited to Congress. But it isn't. The Treasury wants what the Washington Post called Tuesday "unprecedented powers to initiate the seizure of non-bank financial companies, such as large insurers, investment firms and hedge funds, whose collapse would damage the broader economy."

Citing the AIG precedent, White House spokesman Robert Gibbs defended this radical move, saying on CNN, "We need resolution authority to go in and be able to change contracts, be able to change the business model, unwind what doesn't work."

Breathtaking. Coupled with the vast expansion of government spending over the next 10 years, this is socialism, pure and simple.

Yes, we know it's unfashionable to use the "S" word. But we're willing to be unhip in the service of the truth.

It's a frightening thing to see a once mighty, and free, capitalist economy placed under the heel of an incompetent government. But that's precisely what's happening now.

Executive pay, the focus of much public fury right now, is only the start. Your pay will be next, rest assured. So hold on to your wallets, sure, but also hold on even tighter to something even more precious that now seems at risk: your freedom.

Link Below:

http://www.realclearmarkets.com/articles/2009/03/beware_the_encroaching_dc_levi.html

[hkHog]

Again, brilliant, it is absurd that the same government officials who have for so long squandered our amazing economy by leaving us with massive debt and bringing the housing and banking markets to their knees with their ridiculous unsustainable policies have somehow managed to convince the American people that they have done nothing wrong and that they can fix everything by taking their dangerous policy ideas and ratcheting them up even more.

[deejaydana]

Again, brilliant, it is absurd that the same government officials who have for so long squandered our amazing economy by leaving us with massive debt and bringing the housing and banking markets to their knees with their ridiculous unsustainable policies have somehow managed to convince the American people that they have done nothing wrong and that they can fix everything by taking their dangerous policy ideas and ratcheting them up even more.

I get the (short term) need to infuse cash into the system, but when gov't begins to think they have ANY say over private company executive compensation I'm reaching for the pitchfork and torch.

[Prosperity]

I get the (short term) need to infuse cash into the system, but when gov't begins to think they have ANY say over private company executive compensation I'm reaching for the pitchfork and torch.

The other side has a lot more pitch forks and torches

[deejaydana]

The other side has a lot more pitch forks and torches

so "might makes right?"

I get where you're coming from but this could end ugly if D.C. thinks they can use this chance to creep into private industry. The sad thing is, I think it will happen soon and only get more pervasive.

[Prosperity]

so "might makes right?"

I get where you're coming from but this could end ugly if D.C. thinks they can use this chance to creep into private industry. The sad thing is, I think it will happen soon and only get more pervasive.

No. Mostly I am saying that you can't beat populism with force, you have to find ways to co-opt it and pacify it.

[PeterMP]

I get the (short term) need to infuse cash into the system, but when gov't begins to think they have ANY say over private company executive compensation I'm reaching for the pitchfork and torch.

Well, if the government attaches the strings ahead of time, then it is up to the company to make the decision if the attached strings are worth taking the money. What I don't like is what has happened w/ AIG (and others). Where the government knowingly didn't attach any strings and now are trying to act surprised and outraged that people are being paid (even pretty high sums of money).

[SKINS@THEGOALLINE]

Beware the Encroaching D.C. Leviathan

[deejaydana]

Well, if the government attaches the strings ahead of time, then it is up to the company to make the decision if the attached strings are worth taking the money. What I don't like is what has happened w/ AIG (and others). Where the government knowingly didn't attach any strings and now are trying to act surprised and outraged that people are being paid (even pretty high sums of money).

I think maybe you misread the article or my words (and I was vague btw, but not deliberately so. My bad.). The gov't is now hinting that they will limit executive pay for companies, even those not taking any money from them. WTF? This to me is outrageous. It's the potential death of capitalism & Barney Frank is beyond shameless.

[hkHog]

The other side has a lot more pitch forks and torches

You are right, that is a sad side effect of modern public education and yet another reason why we are screwed.

[hkHog]

I think maybe you misread the article or my words (and I was vague btw, but not deliberately so. My bad.). The gov't is now hinting that they will limit executive pay for companies, even those not taking any money from them. WTF? This to me is outrageous. It's the potential death of capitalism & Barney Frank is beyond shameless.

Didn't you know, if you're a politician and you lead the country to financial ruin you are rewarded with more power all while making $350,000 a year (and being able to vote whenever you want to raise your own salary - you are also allowed to not pay tax if you feel like it and chalk it up to ignorance even if you WRITE the tax code, see Charlie Wrangle). If you are a private citizen and you lead your company to financial ruin you are a criminal. If you are a public citizen and you lead your company to financial success you are "greedy" and an even bigger criminal. It all makes perfect sense doesn't it?

EDIT: I almost forgot, if you are a politician who has lead the country to financial ruin you can also run a prostitution ring out of your DC apartment with no consequence http://www.washingtonpost.com/wp-srv/local/longterm/tours/scandal/gobie2.htm

[Prosperity]

You are right, that is a sad side effect of modern public education and yet another reason why we are screwed.

I don't see the relation you do, to say populism is caused by modern public education is very far fetched, and smells like the same sort of boogeyman mentality that played in screwing over this author.

[hkHog]

I don't see the relation you do, to say populism is caused by modern public education is very far fetched, and smells like the same sort of boogeyman mentality that played in screwing over this author.

I say that because the general population does not understand history or economics well enough to understand that radical socialist ideas like the ones they are generally supporting now (executive compensation limits in this case) have NEVER worked and will never work and will certainly not make their lives better (far from it, it will make their lives and their childrens' lives much worse in the long term). Nobody with a proper fundamental understanding of these subjects would EVER think that these were good ideas. Instead of learning to think for themselves they are buying into the BS being spread by Barney Frank and don't realize that he is as responsible for the financial difficulties we find ourselves in today as anyone.

[GibbsFactor]

I think maybe you misread the article or my words (and I was vague btw, but not deliberately so. My bad.). The gov't is now hinting that they will limit executive pay for companies, even those not taking any money from them. WTF? This to me is outrageous. It's the potential death of capitalism & Barney Frank is beyond shameless.

Dude, the Governmnet is hiring Executive Compensation Analysts. Nuff said.

[GibbsFactor]

I don't see the relation you do, to say populism is caused by modern public education is very far fetched, and smells like the same sort of boogeyman mentality that played in screwing over this author.

Haha. The intelligent are full of doubt but the stupid are ****sure!

Give the people a voice and they will inevitably elect a moron.

Populism depends on general education of the people, for that's how a populist opinion is defined. Having a lot of people agree to one thing.

[Prosperity]

Haha. The intelligent are full of doubt but the stupid are ****sure!

Give the people a voice and they will inevitably elect a moron.

Populism depends on general education of the people, for that's how a populist opinion is defined. Having a lot of people agree to one thing.

Is this a coherent argument or 3 separate opinions?

[Midnight Judges]

Again, brilliant, it is absurd that the same government officials who have for so long squandered our amazing economy by leaving us with massive debt and bringing the housing and banking markets to their knees with their ridiculous unsustainable policies have somehow managed to convince the American people that they have done nothing wrong and that they can fix everything by taking their dangerous policy ideas and ratcheting them up even more.

That is an incredibly broad brush you've got there. So broad that the newly elected Democrats in power now can be blamed for all the crap Republicans pulled over the last 8 years.

[stevenaa]

That is an incredibly broad brush you've got there. So broad that the newly elected Democrats in power now can be blamed for all the crap Republicans pulled over the last 8 years.

I know it's hard to comprehend, but neither party escapes culpability in this mess. Put your leftist blinders away for a change.

[IHOPSkins]

....crap Republicans pulled over the last 8 years.

Barney Frank became a Republican 8 years ago?