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Obama's policies risk another Depression
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| Parent(s) |
Issue
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| Contributor | Scott³ |
| Last Edited | Scott³ Dec 13, 2009 03:32pm |
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| Category | Opinion |
| Author | Scott S. Powell and Ron Laurent |
| News Date | Friday, December 11, 2009 09:30:00 PM UTC0:0 |
| Description | "Light at the end of the tunnel or an oncoming train wreck?
In the panic following the insolvency of Fannie Mae, Freddie Mac and Lehman Brothers in September 2008, the American taxpayer was stampeded into bailing out AIG and Wall Street. We were told that $700 billion was needed to establish the Troubled Asset Relief Program (TARP) because the country faced nothing less than a collapse of its financial system.
Inexplicably after Congress passed it -- almost like a bait and switch -- TARP was directed at banks rather than troubled assets. A little more than a year later, TARP Inspector Neil Barofsky reports that AIG's $1.5 trillion in credit fault swaps did not, after all, pose systemic risk. So if we were misled about the TARP bailout, it seems appropriate to question other aspects of government intervention since unemployment, foreclosures and bank failures have risen.
Should we believe Federal Reserve Chairman Ben Bernanke & Treasury Secretary Tim Geithner that there is daylight at the end of the tunnel or could it be the beam of an oncoming locomotive pulling more economic wreckage?
The Fed is essentially out of bullets with the funds rate at 0 percent. Accommodative monetary policy may be necessary to revive economic activity, but it is neither sufficient nor without risk. Clearly help is needed from effective trade, fiscal and regulatory policy.
Trade policy is the first to consider since the decline in commerce during the Depression was largely due to the Smoot-Hawley Act's increased tariffs. Today, Washington is at odds with free trade, inserting a "Buy American" provision in the stimulus bill and pandering to labor unions.
The Obama administration has overlooked the importance of trade in other ways, such as the failure to get approved free-trade pacts already negotiated with South Korea, Columbia and Panama; new tariffs on Chinese tires and steel products; and letting our competitors race ahead in securing new free trade agreements." |
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