Friday, June 19, 2009

So Much for Obama's "Modest Government Intervention"

An article in the WSJ reports that "industrial loan companies" (ILCs) are being targeted under Obama's financial regulation proposals. The 2nd paragraph of the article describes what an ILC is.

The article reports that ILCs are being "squeezed" - by whom or how hard is unknown. What should be clear is that Obama's claim that he is intervening modestly and only due to a crisis are disingenuous. This is part of a growing trend where President Obama says one thing to give the impression that what he's doing is modest but the actions have unintended consequences that ripple through the economy. It's stuff like this, which makes me so negative on future economic growth prospects. I think a lot of the economists who are surveyed about economic predictions who believe we're in for a recovery because of this or that piece of data are not thinking strategically and lifting their heads up to see that the president's instincts are bad for business. It shouldn't be surprising that broad financial regulations developed by liberal people with no business and financial sector experience will prove to be poorly designed. The financial sector is a broad and complex industry that is vitally important for all business sectors. Finance is the lifeblood of an economy. It isn't just banks. So when Obama's advocating "structural change", you can't easily or beneficially do that without choking it off if you're proceeding in this way with people who don't know much about it.

Initial steps towards socialism are always somewhat modest. They have to be incremental especially in a country like ours where socialism is so foreign. Obama is overstepping his mandate on a daily basis. People elected him in part because he was perceived by enough independents to be moderate. They did not elect him to start a march towards socialism. One silver lining in these clouds is that he's defining who he is. As he does so, the Republican party will be able to rightfully claim he is an anti-business, deficit creating, socialist whose policies are actually preventing a recovery. I believe that's why he's starting to slip in the polls and why, if the Republicans don't give in and vote for this garbage and get tied to it, they will win a lot of seats in the Congress in 2010.

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