Governor Romneycare is campaigning to be the Republican presidential candidate. He tells us that:
Every turnaround has three rules. Focus, focus, focus. Focus on what’s most important, devote all your energy to that which is broken. … Instead of focusing his energy on the economy he delegated the stimulus to Nancy Pelosi and Harry Reid, and they built a stimulus which grew government jobs but didn’t grow private-sector jobs. And then he went to work on his real agenda. And that was cap and trade, to raise energy costs; card check to unionise at places of employment where the employees didn’t want unions; Obamacare, where the federal government takes over health-care; and regulatory reform relating to the financial services sector, which of course scared the heck out of anybody in the financial sector. He went to work on this agenda. And virtually every aspect of his agenda increased the degree of uncertainty that existed in the employment sector.
Employment is a means to an end: We don’t need employment, we need productive employment. The only thing the government can do to enable productive employment is to stop enabling unproductive employment.
What you subsidize, you get more of. What you tax, you get less of. The taxpayer has massively subsidized the finance sector, and we now have far too many people employed in finance. Most of them need to lose their jobs. The vast majority of them need to lose their jobs.Clearly we do need regulatory reform in the financial sector, since people in the financial sector have been misbehaving. And since they have been misbehaving, we do need to scare the heck out of them. The problem with the Obama financial reform is that it has not fixed anything that was wrong, and has not scared the heck out of them.There now are a bunch of civil lawsuits alleging massive fraud. The fraud was committed to unload dud loans. Why no criminal lawsuits?
The government under Bush vigorously encouraged the banks to lower their credit standards, which resulted in dud loans. The government issued a series of white papers arguing that low credit standards were wise and profitable, that high credit standards were racist, and grounds for racial discrimination lawsuits. None of this has been reformed under Obama. The government cajoled the banks, threatened them with racism lawsuits, and enabled politically correct bankers to take over politically incorrect banks, which politically correct bankers (in particular Kerry Killinger of Washington Mutual) proceeded to make gigantic quantities of dud loans. The government, under Bush and Obama, has altered accounting rules to make it easier for the financial sector to lie about money, in particular “Mark to Myth”.
The financial sector is still unreasonably large, unreasonably opaque, implausibly profitable, and receives gigantic government handouts. We need a dramatically smaller and more transparent financial sector. The overwhelming majority of people working in the existing financial sector need to be unemployed and seeking alternative forms of employment. The finance sector is too politicized: too left wing in that the government uses it to dispense money to favored voting blocks, generally voting blocks of poor people, too right wing, in that it makes a small number of people inordinately rich though crony capitalism and selective government favor, and too left wing, in that those inordinately rich people, such as Kerry Killinger, seem to have become inordinately rich through their commitment to left wing politics and their cozy relationship with left activist organizations such as Acorn. The Obama regime has been an improvement in that today such cuddly relationships between the left and the finance sector now come under hostile scrutiny from the Republican party, while under the supposedly right wing Bush, everyone ignored them, Democrats and Republicans alike. Despite all the outrage about Obama’s selective government favor to left connected businessmen, we getting arguably getting less of that under Obama than we got under Bush, precisely because of all the outrage.
During the supposedly right wing Bush government, the conspicuously left wing Kerry Killinger was made remarkably rich, in that through regulatory favor his bank was given charge of lots of well and responsibly run bank, which he proceeded to run irresponsibly and incompetently, losing through incompetence the paperwork that kept track of where the assets were, and lending for political reasons piles of money to people with neither ability nor the inclination to repay it. To sustain these activities, he committed massive fraud, in that through a mixture of incompetence, lost paperwork, and deliberate deception, he misrepresented dud loans to resell them. The government continues to support and protect similar fraud.
Some of the blame for Kerry Killinger rests with Clinton, and some of it with Obama, and quite a bit of it lies with the congress that was dominated by Democrats during the latter years of Kerry Killinger’s rise, but the most conspicuous, objectionable, and incompetent far left wing crony capitalist of recent times got most of his loot under the Bush presidency,
Further, these subsides are granted to some organizations but not others, in that one organization gets implicit or explicit government guarantees, and another organization does not, one organizations gets one set of rules, and another organization gets another set of rules. This is crony capitalism, which results in stupid and incompetent people running things, as illustrated by the banks massively mucking up their paperwork and losing a vast variety of paperwork in a vast variety of ways. Goldman and Sach is full of PhD’s from Harvard, yet they did not know the crash was happening until over a year after everyone that I knew saw that a well founded panic was happening. This is so stupid that it seems likely to be politically induced stupidity. Since no one in the government or the finance sector wanted to believe these policies were leading to disaster, they were unable to see the disaster even when it was actually happening. On the other hand, the unending paperwork screw ups revealed in the foreclosure scandals are just plain ordinary everyday stupidity and incompetence, suggesting that that Harvard awards PhDs more on the basis of political orientation and connections than on ability.
What we need is a total purge of the finance sector, through widespread massive bankruptcy induced by truthful accounting, and the withdrawal of special government favor and privileges granted to some organizations but not others, so that the only bankers remaining are those old fashioned types that believe that anyone who needs credit does not deserve credit, the kind who lend you an umbrella when the sun shines, and snatch it back when it rains. That would scare the heck out of them.