April 4, 2009

The Pitchfork as the Symbol of Tyranny

Justin Katz

It's the pitchfork line that's attracting attention, but this strikes me as the more astonishing exchange to emerge from President Obama's meeting with banking bigwigs:

JPMorgan's Dimon spoke first. He began by complimenting the president on the economic team he'd assembled. And he said his industry needs to explain more directly to the American people that the economic recovery plans are already working. Dimon also insisted that he'd like to give the government's TARP money back as soon as practical, and asked the president to "streamline" that process.

But Obama didn't like that idea — arguing that the system still needs government capital.

The president offered an analogy: "This is like a patient who's on antibiotics," he said. "Maybe the patient starts feeling better after a couple of days, but you don't stop taking the medicine until you've finished the bottle." Returning the money too early, the president argued could send a bad signal.

Several CEOs disagreed, arguing instead that returning TARP money was their patriotic duty, that they didn't need it anymore, and that publicity surrounding the return would send a positive signal of confidence to the markets.

How is it that the newly elected president — previously a sparsely attending Senator, previously a state-level politician, previously some other things and a community organizer — is the one writing prescriptions that leaders of finance are too inexperienced to adjust? There's a dangerous side to this change-in-which-we-must-believe, and behind it is a hand to which a pitchfork is not unfamiliar.


Stuart Varney elaborates:

I must be naive. I really thought the administration would welcome the return of bank bailout money. Some $340 million in TARP cash flowed back this week from four small banks in Louisiana, New York, Indiana and California. This isn't much when we routinely talk in trillions, but clearly that money has not been wasted or otherwise sunk down Wall Street's black hole. So why no cheering as the cash comes back?

My answer: The government wants to control the banks, just as it now controls GM and Chrysler, and will surely control the health industry in the not-too-distant future. Keeping them TARP-stuffed is the key to control. And for this intensely political president, mere influence is not enough. The White House wants to tell 'em what to do. Control. Direct. Command ...

After 35 years in America, I never thought I would see this. I still can't quite believe we will sit by as this crisis is used to hand control of our economy over to government. But here we are, on the brink. Clearly, I have been naive.

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Obama's analogy is completely backwards. To the extent that federal stimulus was a good idea, it was built on the proposition that it would not be displacing private spending. If the economy begins to recover, a well-designed stimulus would be pulled back to accommodate it. Obama's ideological focus on infrastructure spending already makes that impossible to some extent, so to refuse the private sector's attempt to do this on its own increases the chance that we will experience a double-dip recession rather than a recovery.

If the economy begins to recover and stimulus spending cannot be decreased, we will suffer excessively high inflation, which will force the Fed to raise interest rates and kill off the recovery prematurely. I would understand it if Obama thought the chances of a quick recovery were low, but the failure to plan for the eventuality (whether through arrogance or ignorance) could make us much worse off.

Perversely, the structure of Obama's plan forces us to hope for a slow recovery. This was completely preventable.

Posted by: Mario at April 4, 2009 7:21 PM

Perhaps we should adopt the Republican plan for the financial crisis instead ... oh yeah, theat's the plan that got us into this crisis.

Thanks again for the latest "pitchfork" scare Justin. You really do well with these symbols.

Posted by: Pragmatist at April 4, 2009 7:29 PM

Ditto everything Mario says.

There have been repeated disclaimers that all of these bailouts and stimuli are not about enlarging government or aggregating power. This latest exchange between the President and a private industry does nothing to bolster their case.

Posted by: Monique at April 4, 2009 8:59 PM

You don't get it. The game is changing. Unlimited growth has been revealed as what it always was, an impossibility. Likewise with unlimited capitalism. As a nation, we produce almost nothing that the world wants, exception being weapons of war; we're really good at them. What do we have to sell that isn't wrapped up in khaki and camouflage?

See Ecclesiastes, 3.1.

Posted by: OldTimeLefty at April 4, 2009 10:56 PM

"Perhaps we should adopt the Republican plan for the financial crisis instead ... oh yeah, theat's the plan that got us into this crisis."

Pragmatist, do you mean the Republican plan that was in place between 2000 and 2006? When there was an R in the White House and a Republican Congress? Is that the plan that you're talking about? How was the economy then? Or are you talking about the economy and the Congress that we had from 2006 to present? Which one is that plan that you're referring to? I don't remember anyone complaining about their 200.5k plan in 2006.

Posted by: Patrick at April 5, 2009 10:56 AM

Hey OTL,
I guess living under a rock in RI, you're unaware of the fact that most if the information technology products - computers, network gear, system and application software, pharmaceuticals, biotech and medical instruments are created, marketed and sold by US companies all over the world.

Posted by: Bob W at April 5, 2009 11:00 AM

OTL is right for once. We are a nation of consumption and the few tech industries that still remain here will be absorbed by India sooner or later, especially once the EFCA is passed.

Free trade and unions cannot functionally co-exist and whether we like it or not unions are here to stay.

Posted by: JP at April 7, 2009 9:06 AM
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