If These Guys Are Mad, Something's Going Right

Gentle readers often wonder how to form Seldom-Wrong opinions if SWNID does not pontificate. We herein provide a SWNIDish solution to SWNID's inability to address everything:

Simply see what Frank Rich and Paul Krugman think. Then think the opposite.

Today's Gray Lady provides the fulminations of both reactionary leftists, who have as of this week abandoned hope of The Obama managing the millennium.

For Rich, the outrage is Obama's failure to leverage massive populist outrage against AIG and accompanying Wall Street fat cats to effect the full-scale federal takeover of the world of banking and investing.

For Krugman, the outrage is Tim Geithner's leaked plan to provide a federally backed system for purchasing toxic assets from banks, thereby creating a liquid market for such assets so that a higher value can fairly be assigned to them. Krugman's beef is that this allows too much private enterprise of the government-backed variety.

Rich at least acknowledges that the AIG bonuses amount to about 1/10th of a cent on every dollar of TARP money received by AIG. But never mind that the sum hardly affects the impact of TARP on liquidity. The point, he says, is that Americans, all seething with righteously apoplectic indignation, are gathering in torch-and-pitchfork-bearing mobs to take down such miscreants and all associated with them. Hence, Obama will never be able to get anything done with his wider agenda, and--worst of all--the evil Republicans (forgive the redundancy) may be thrust back into some measure of power.

Krugman more subtly and indirectly bemoans the loss of the moment to nationalize the banks fully. His word count is obviously more reasonable.

Both pundits quietly are mourning the death of their grand narrative. Obama, a historic and charismatic candidate, came to the Oval Office at a moment of "crisis." Said crisis was not to be wasted. It was to be used to create what the Great Depression could not: an American welfare state replete with government ownership of capital and centralized planning of the economy. Banking, investing, health care and automobile manufacture were to become the possession of Us the People, led by Him the Obama. And that was just the start.

Well, in a couple of weeks, that's all unraveled. Not only has the government--yea, even this anointed government--proved from the get-go utterly inept at managing businesses, the "crisis" has shown significant signs of abating with the measures to preserve liquidity already taken. Political pressure, most especially related to the obscenely elevated level of federal spending and borrowing proposed by the Obamanoids, now appears more than sufficient to slow or even stop the move to remake the Republic on the foundation of the financial freeze-up.

Note well that SWNID does not declare "Mission Accomplished" because these two are disillusioned. Obama still threatens to reset baseline government spending in a way that will handicap prosperity for our Republic's citizens. But we take heart that once again, the forces of politics appear to have restrained many of the excesses of politicians.

As footnotes, we call attention to a couple of particularly amusing aspects of these columns, one for each.

Rich complains that Larry Summers is so politically deaf that he makes Tim Geithner look like Bobby Kennedy. We love the notion that Bobby was the epitome of the politician who taps popular outrage. Had he not been tragically assisinated, Bobby might have made the 1968 election as close as Humphrey did, though it's just as likely that his further-left candidacy would have pushed more independents and Democrats to vote for Nixon, who really tapped popular outrage in 1968. And if one wants an even better example of the politician with a fine ear, one ought to look to the presidential elections of 1980 and 1984.

Krugman has discovered "moral hazard" as an objection to the Geithner toxic-asset plan. We celebrate that, as it was the moral hazard of government-guaranteed mortgages that gave rise to the financial crisis. Apparently there's only moral hazard when Krugman doesn't like the program otherwise.