Oops!

For most of his brief administration, President Obama and his henchmen have spared no effort in demonizing Wall Street, bankers, captains of industry, pretty much any business that makes a profit. The rationale for flogging Wall Street? According to the Wall Street Journal, a lot of it has to do with opinion polls.

Mr. Obama and his aides regularly and publicly criticized financial firms for buying private planes and redecorating offices and hosting lavish parties. The talk was fueled in part by the results of surveys by New York pollster Joel Benensen, commissioned by the Democratic Party, which Mr. Axelrod regularly reviews. The polls consistently showed that the public blames big financial firms for the current mess, and is hesitant to offer aid.

As outrage directed at Wall Street starts to spill over to the politicians who loaned them hundreds of billions in tax dollars, and as they start to realize that a lot of what they plan to push through is going to require private sector cooperation, now the administration is “reaching out” to Wall Street. The problem is the same as with a dog you constantly kick, eventually it starts to flinch. In other words, the private sector is even more leery of the government than before. The administration is planning on enticing private investors (who want to make a profit of course) into buying devalued loan assets, with the expectation that they will increase in value and then the investor can sell them. The investor makes a profit, the government hopefully has limited exposure and banks can start to shed a ton of loans that are dragging them down. Sounds great, but if I am an investor with money to spend, do I really want to make a Faustian deal with the Federal Government as my partner? These same people who are trying to retroactively tax legal bonuses for AIG are sure to look at big profits from Secretary Geithner’s plan (accompanied by big risks) and say that these investors made a profit using tax dollars. Who wants to risk their profits on the forbearance of Congress? There are far less risky investment options out there. As the Journal pointed out, who wants to risk being the next person being deposed in front of Barney Frank and friends, eager to score political points for excoriating evil capitalists, investors who *GASP* dared to make a profit.

Much of this stems from the people that the President is surrounding himself with. Instead of filling up the ranks of the administration with business people, Obama has been picking academics and bureaucrats. Say what you will about the malfeasance of some on Wall Street, the worst run business is unarguably worlds more efficient than the Federal government and most of these academics are in academia instead of the business world because they don’t have what it takes to run a business and their economic theories prove disastrous in the real world (more on that in an upcoming post). These are not exactly the people you want to have making all of our nation’s economic policies. So we find ourselves in a time of crisis with a bunch of politicians, economists with theories that are laughable anywhere other than conferences and universities and opinion pollsters running the “recovery”.

Our problem is not that we have invested too little power in government, it is that we have invested too much. This was evident in the Bush administration where “compassionate conservatism” meant talk like a conservative but spend like a liberal. Now we have Obama, who talks like a liberal and spends like a socialist. Things are not getting better folks.