Wednesday, February 10, 2010

Populism Bait

Bloomberg reports that Obama sat for an interview with Business Week. In response to multi-million dollar bonuses awarded to a couple of "fat cat" bankers:
The president ... said in response to a question that while $17 million is “an extraordinary amount of money” for Main Street, “there are some baseball players who are making more than that and don’t get to the World Series either, so I’m shocked by that as well.... I, like most of the American people, don’t begrudge people success or wealth. That is part of the free-market system."

Yes, that is absolutely true. Krugman's response? "Oh. My. God." and "We're doomed."

While Krugman is correct that "irresponsible behavior by baseball players hasn’t brought the world economy to the brink of collapse and cost millions of innocent Americans their jobs and/or houses," the last year has brought a very fair amount of success to Wall Street, put banks and lenders back on their feet, and turned the economy around. People are still losing jobs, albeit much more slowly, so for many Americans there is no recovery. But it's still there; you can't argue with facts. Some sectors will recover before others. How long do we penalize Wall Street banks, most of whom have already paid back government bailout money with interest, such that the government was able to put $45 billion or so back into reserve?

If one thing is true, it's that Wall Street wants their way of life to get back to normal as quickly as possible, just like the rest of us. I would like to be making $250k a year again, but I'm not yet there. My business is growing, money is steady, and the economic recovery is slowly bringing more Americans into the mortgage market. Obama is doing the right thing by continuing the stimulus money and by being very accommodating to Wall Street. Their money funds a lot of what goes on in this country, even on Main Street. Of course, the P.R. factor sucks, and populists will most assuredly pounce on Obama for these remarks as a sign that he's in deep with Wall Street. Name me one effective politician who isn't? Do you want to cede political responsibility for the world's most complicated and powerful economy to a bunch of inexperienced Tea Party lunatics?

In truth, even those organizations find a lot of their fuel not from Joe Six Pack, but from Joseph de Banker III. We need to keep in mind that the populist backlash on both sides is largely irrational, incoherent, and lacking any clear vision beyond "throw them all out." I want cool, collected, and calm governance. Yes, huge mistakes were made by the former administration, and it appears that the current administration is continuing those mistakes. But in the area of bailing out the financial sector and injecting huge amounts of capital into the economy, no huge mistake was made. It was, in fact, that action which prevented a global depression, the likes of which we cannot imagine. Even Krugman acknowledges that.

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