The New Deal, Part 2

"Obama Hammers Wall Street Banks" (Financial Times, Jan. 21, 2010)

"New Bank Rules Sink Stocks" (Wall Street Journal, Jan. 21, 2010)

"Obama Rips Banks, Proposes Ban On Proprietary Trading" (Investor's Business Daily, Jan.21, 2010)

Obama's latest attack on the banking sector is reminiscent of a bygone era when government intervention promised to lead the country out of depression. Like today, President Franklin Delano Roosevelt faced double-digit unemployment (topping out at 25%), and the widespread failure of the nation's banks (more than 1/3 in the early 1930s). The big government programs comprising his New Deal were to usher in a period of economic prosperity, and like Obama is doing now, he sought to vilify the businessmen and bankers who "immorally profited" at the expense of the little guy.

What economists have discovered, however, is that FDR's meddling and central planning actually extended our economic depression by 7 years, causing this period to be renamed the Great Depression. His intervention was based on the belief that because the free market's 'invisible hand' could not be trusted to restore our economy, government policies were the answer (which also allowed him to create generations of dependents on government largess, thereby earning their votes in perpetuity).

Despite the facts of history, we again have a tin-eared, big government president who is attempting to wrest ever more control over the economy. Obama's latest fulmination on the banking sector will only exacerbate our current recession, just as all of his past meddling has done. Ever wonder how everything Obama touches turns to crap? He's certainly missing the Midas touch.

In his Wall Street Journal piece, "Obama Is Killing America By Killing Wall Street," Evan Newmark astutely reminds us that "job creation in our economy comes from profits and growing incomes. [Yet,] here is America’s best-run company [Goldman Sachs] almost ashamed of its profits and bragging about how much less it’s paying its people." While many banks experienced trading and investment losses (the target of Obama's ire), an entire slew of financial institutions failed because of mortgage lending programs foisted upon them by the US government!

How far does the economy need to sink before this administration (and congressional Dems) heeds Reagan's axiom: Government is not the solution to our problems - it is the problem?