North Star Writers Group - Syndicated Commentary: Opinion, Humor and Features

September 25, 2008

Bailout Hubris: Is Uncle Sam Flying Too Close to the Sun?

Exploding energy prices? Yeah, yeah. Cratering home values? So what? Sinking dollar? Yadda, yadda, yadda. Rising unemployment? Big deal. Market crashing? Yawn.

Wanna know what keeps me up at night . . . and should have you popping Valiums, too?

When politicians all have the same thing to say about the economy, that’s what.

To wit . . . match these sound-alike sound bites regarding the current financial crisis with the appropriate solon:

A. “We have to have a 9/11 commission to find out what went wrong and to fix what's going to happen in the future so this never happens again.”

B. “While a bipartisan bailout plan is needed this week, only political reforms will make sure such a crisis never happens again.”

C. “We need to then take a step back and say, why did this happen, we can’t ever let it happen again.”

D. “Has the private market hurt themselves with so much bad paper there may need to be some public intervention, at the very least in a package of very tight regulations, to guarantee it doesn't happen again?”

E. “And once we stabilize the markets, we then have to take actions to make sure this doesn't happen again.”

For those of you playing at home, the answer key is:

A. John McCain

B. Barack Obama

C. Hillary Clinton

D. Democratic House Banking Chairman Barney Frank

E. Treasury Secretary Henry Paulson.

(And if you got those all right: run, do not walk, to cancel your subscription to Fox News Channel, CNN and CNBC, stop hanging out at Politico and HuffPo, and go get some help. Seriously.)

Anyway, this little task should be a snap for the assembled minds in Washington.

Make sure a market crash “never happens again?” All you have to do is repeal the business cycle . . . abolish the basic laws of economics . . . and alter fundamental human nature. (Paging Dr. Phil.)

And oh yeah – ignore the dot.com craze. The recessions of 1990, 1982, 1980, 1973, 1969, 1960, 1957, 1953 and 1948. The Great Depression. And the Panics (that’s what they used to call them) of 1912, 1907, 1893, 1873, 1857, 1837, 1819, 1816, 1812 and so on.

Plus millennia of bank runs, bubbles and bet-the-house speculation on everything from securities to silver, gold, jewels, real estate, artwork, stamps, oil, lumber, beads, baseball cards, pork bellies and brontosaurus teeth (OK, I made that one up) – not to mention all those maniacs tip-toeing through the tulips for thalers in 17^th Century Holland.

The truth is that economic cycles – set in motion by the same greed and ground to a halt by the same fear that have been around since Eve bit the apple – are part of the real world where most of us outside the Beltway live.

Since the dawn of time, the sun has risen and set, the tide has come in and out, and good times have alternated with bad in a self-correcting market mechanism – all without the intervention of the Treasury Department and Congress.

But something else has also been with us since man’s earliest days – like when that Icarus dude ignored the air-traffic controller and suffered a meltdown of his own.

Call it hubris. Chutzpah. Gall. Or maybe just the audacity of hype.

Whatever you call it, most of the instances in which U.S. markets did not readily self-correct had one thing in common: Washington’s wishful thinking that it had the authority, or worse yet, the ability, to tame the economic tides.

Messrs. Smoot and Hawley, meet the Great Depression. Richard Nixon’s wage-and-price freeze spawns stagflation. Jimmy Carter’s oil price controls, windfall profits taxes, easy money and uber-regulation? All they did was supercharge the 1970s energy shock – and offer up consecutive years of double-digit price hikes.

But if you think all that was over the top, you ain’t seen nothin’ yet.

Not when Bonnie Bennie Bernanke hints that $700 billion may just be the down payment on the Biggest Bailout Ever.

When Paulson, channeling Nero, is turning thumbs up and thumbs down on the fate of Wall Street’s grandest gladiators – and wants to extend the same authority to the “toxic debt” of Main Street.

When Commander McCain is readying the yardarm for financial executives guilty of “unbridled greed.”

When Barney (BFF of Fannie) Frank is promising “very tight regulations” that will “guarantee” against further market mayhem.

And when the proud creative team who brought you the Transportation Security Administration – the better to strip-search Grandma with – now wants to send your financial portfolio through the X-ray too. (“Please remove your laptops, shoes, nail trimmers, 401[k], stocks, bonds, CDs and anything else that might create risk or otherwise make money.”)

The fabled Prague Spring of 1968 produced the phrase “socialism with a human face,” a term others adopted to describe so-called “democratic socialism.” This is precisely where we seem to be headed – from the other direction and possibly with a large “D” – in this Washington fall of 2008.

Whether that human face turns out to be Barack Obama’s, Frank’s or even McCain’s or Paulson’s, I have an answer at the ready.

To coin a phrase: “Thanks – but no thanks.”

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