Economic Czar | The Daily Capitalist

Systemic Risk Council

By Jeff Harding

Another “you read it here first.”

Senator John Warner criticized the Obama Administration’s grant of power to the Fed to regulate financial risk, saying that would put too much power in the hands of one institution. Instead he proposes a Systemic Risk Council to regulate economic risk:

He proposed, based on [...]

Barack Obama: GM’s New Chairman of the Board

By Jeff Harding

It is happening here.

“We can’t theorize about the future,” cried Wesley Mouch, “when there’s an immediate national collapse to avoid! We’ve got to save the country’s economy! We’ve got to do something!” …

“You’ve been making temporary adjustments for years. Don’t you see that you’ve run out of time?” said Rearden…

“We can’t afford any theories!” cried Mouch. “We’ve got to act!”

“Well, then, I’ll offer you another solution. Why don’t you take over my mills and be done with it?” said Rearden. …

“Oh no!” gasped Mouch.

“We wouldn’t think of it!” cried Holloway.

“We stand for free enterprise!” cried Dr. Ferris.

“We don’t want to harm you!” cried Lawson. “We’re your friends, Mr. Rearden. Can’t we all work together? We’re you friends.” …

“We don’t want to seize your mills!” cried Mouch

“We don’t want to deprive you of your property!” cried Dr. Ferris. “You don’t understand us!”

“I’m beginning to,” said Rearden.

Before you jump out of your chair, let me give you one more quote from Atlas Shrugged:

“I wouldn’t exaggerate the importance of Buzzy Watts of the National Shippers Council. He’s been making a lot of noise and giving a lot of expensive dinners in Washington, but I wouldn’t advise taking it too seriously.”

“Oh, I don’t know,” said Mr. Weatherby.

“Listen, Clem, I do know that Wesley refused to see him last week.”

“That’s true. Wesley is a pretty busy man.”

“And I know that when Gene Lawson gave that big party ten days ago, practically everybody was there, but Buzzy Watts was not invited.”

“That’s so,” said Mr. Weatherby peaceably.

“So I wouldn’t bet on Mr. Buzzy Watts, Clem. And I wouldn’t let it worry me.”

“Wesley’s an impartial man,” said Mr. Weatherby. “A man devoted to public duty. It’s the interest of the country as a whole that he’s got to consider above everything else.” Taggart sat up; of all the danger signs he knew, this line of talk was the worst. “Nobody can deny it, Jim, that Wesley feels a high regard for you as an enlightened businessman, a valuable advisor and one of his closest personal friends. Taggart’s eyes shot to him swiftly: this was still worse. “But nobody can say that Wesley would hesitate to sacrifice his personal feelings and friendships—where the welfare of the public is concerned.”

The above quotes come from Ayn Rand’s Atlas Shrugged, a masterpiece of political philosophy and a powerful defense of individualism, freedom, and free markets. Please spare me the lecture about her shortcomings or her writing style. Fifty years after it was first published she still sells 200,000 copies a year.

For those of you who aren’t familiar with the novel, its premise is that world needs entrepreneurs, their brains, their drive, and capitalism to create wealth and make a better life for all of us. In the novel, increasing state control of the economy causes these doers to go on strike and let the world collapse until they can come back on their own terms. They see that being controlled by the State is just another version of slavery.

… Continue reading Barack Obama: GM’s New Chairman of the Board

Geithner: “This Plan Will Work”

Timmy’s in trouble again.

Obama Administration Plans Major New Controls Over Economy

Barney Frank charged by Obama to draft new regulatory scheme for financial companies.

The Obama Administration is poised to implement radical new financial controls over the US economy. Instead of financial and banking decisions being made by many individuals acting in the free market, an elite group of bureaucrats will issue edicts that will affect the well being of all Americans. These new rules will change the way our financial markets operate, especially relating to risk. The ability of commercial banks, investment banks, equity partnerships, and hedge funds to create innovative financial products will be severely restricted.

Fed Chairman Bernanke, and, at the behest of President Obama, House Financial Services Committee Chairman Barney Frank are now working on a plan to regulate the economy to control financial institutions in a way not seen since the days of FDR’s New Deal.

According to news reports from the Wall Street Journal:

Federal Reserve Chairman Ben Bernanke said regulators should be given broad new powers to oversee financial markets, reflecting the Fed’s evolving view that a more aggressive government hand is needed to ensure the future safety of the financial system.

Among his recommendations were tougher capital requirements for big banks, limits on investments by money-market mutual funds, and the introduction of some mechanism that would allow the U.S. to wind down big financial institutions and possibly run them temporarily.

… The recommendations were largely consistent with measures being pushed by House Financial Services Committee Chairman Barney Frank (D., Mass.), who is expected to be a key architect of the new financial regulation. There was one exception. Mr. Frank has said any changes would have to discourage “excessive risk taking” by executives, which he argues helped fuel the financial crisis. Mr. Bernanke didn’t touch on compensation practices in his speech.

Mr. Frank said he was supportive of Mr. Bernanke’s proposed outline. He said the speech reinforced for him why the Federal Reserve should be given powers to broadly oversee the safety of the entire financial system. Currently, various regulators oversee discrete parts. “I don’t know who else could do it,” Mr. Frank said.

President Barack Obama has charged Mr. Frank with developing an outline of how a new system would work in time for the Group of 20 meeting in early April.

These political leaders are using this crisis to further their long held desire to increase federal control of the economy. This is no secret: liberals such as Mr. Frank have strong beliefs about the positive role of government in the economy. They believe capitalism is inherently unstable and that the guiding force of the government is necessary to protect citizens from its perceived ravages. They believe they are capable of making certain economic decisions that should not be entrusted to its citizens, such as bankers and investors.

… Continue reading Obama Administration Plans Major New Controls Over Economy

President Obama Appoints Nobel Laureate McFadden to Head New Financial Risk Commission

A recent annual conference of Nobel laureates in economics featured debates on the current financial market crisis and the role of government regulation. As noted in the Wall Street Journal:

Many of the Laureates’ criticisms focused on the notion that banking has drifted from its fundamental purpose. Amid a rush to profit, “what’s been [...]