The outrage propagating through the media over the AIG bonuses is starting a cascade by which the government is descending down a slippery slope into micro-management of the economy.
First we attach strings, preventing companies receiving bailouts from fulfilling contractual obligation of granting bonuses. Then, we get new ‘regulations’ over how much executives of financial companies are allowed to get paid – regardless of whether or not the company is receiving bailout money. Now, there are rumors that Rick Wagoner, the chairman and CEO of General Motors is being ‘asked’ to step down by President Obama.
This all makes me wonder – exactly how far down the “rabbit hole” are Obama and Congressional Democrats trying to take us?
I understand, and largely agree, that lots of people screwed up handling their affairs in mortgage markets and complex derivatives – from the finance modelers to theCEOs . We are rightfully outraged that the bail-out money is being used to secure the retirements of the very people that messed up. But, what worries me now is not that the economy is now in a corrective recession – it’s that Obama and company are opportunists – playing on our fears and uncertainty to concentrate power in the hands of the political elite.
Shouldn’t we be equally outraged that the same politicians who created legislation that made the subprime market possible – such as Barney Frank and Harry Reid – are now ‘in charge’ of creating more regulation that somehow supposed to stop people from being greedy? I, for one, am outraged that we’re tripling the federal deficit to buy up toxic assets, so that prices don’t have to be determined by market demand – prices would fall and banks would lose billions if such a thing happened. Instead, the government is propping the industries that were doomed to failure – increasing the national debt just to postpone the inevitable.
What’s worse, is that because the public is demanding punishment for those involved, the government is expanding itself to take on the role – supposedly fulfilling the will of the voter. But, the market crash is itself the thing that’s punishing those who made the mistakes – if the government would only let that happen – by taking away undeserved profits. But why let the market do a job that the government could mess up doing?
The Federal Reserve is pumping money into the big banks so financial capital starts flowing again, but nobody knows what the federal government is going to do next, so they aren’t lending. Deficit spending, coupled with stifling regulation is going to make it even harder for finance companies to profit – and many of it’s best talent will probably just quit for greener pastures.
Government is propping up businesses that would have normally failed, and are, for some reason, surprised that CEOs are taking advantage of this lifeline. What’s worse, politicians are taking advantage of this for political maneuvering and power grabbing – all on the back of current and future tax payers.
If we don’t let the free-market punish bad decisions made in the market, and allow the politicians to punish and create new regulation – who is going to punish thepunishers? Who will tell the politicians that they’re going too far? Or, like government is doing with the bad banks – will we write the politicians a blank check for usurp authority at the expense of our precious economic freedom?
