President Obama’s comments about the “fat cats” either show a fallacious position towards the bailed-out banks or a naivety towards how free market institutions work despite federal intervention.
The media has made a lot out of President Obama’s tough talk on “60 Minutes” earlier this week, probably because many Americans can relate exactly to what he was saying.
Did we as Americans really give the institutions that were “too big to fail” enough tax dollars to keep from failing, only to see them recover while the American economy continues to stagnate and unemployment remains dangerously high?
Well, so far – yes.
And while we are unable to completely address the ramifications of this until next November, we are capable of watching the rue of a president that acquiesced to the whims of the financial industry with a socialist’s vision but within a free market society.
Huh?
President Obama – and probably a huge section of Americans – seemingly cannot understand why financial institutions would be so willing to take the government’s help (i.e., American tax dollars at work) without having the same willing to curb big bonuses, buy other banks, and otherwise act in “fat cat” fashion once given the opportunity to repay the favor to the American people. I understand the anger (much of it matching the rhetoric mentioned by some that these institutions should be allowed to fail), but I don’t get their disconnect with the situation. The failure by President Obama and others to understand why free market entities in this instance would do something other than expected – namely, act in their own self-interests regardless of where their funding originates – is a miscalculation on how and why the economy operates as it does, a misstep that cost the American people billions without the benefits required to truly rebuild this economy. Free market enterprises do not hold patriotic loyalties.
Either the president and others truly misread how this bailout situation would play out or his comments Sunday are part of a ruse that misleads the people of this nation and sidesteps accountability on the part of the administration.
Did the president and several leaders within the supermajority in Congress really expect the bailed-out bunch – the same group of selfish risk-takers that spent much of the decade reporting record profits while streamlining their work force through off-shoring many quality mid-range jobs (including those in technology and science) – to forgo their big-dollar bonuses and penchant for acquisitions in some karmic obligation to “do the right thing” by American taxpayers? If so, it would explain the lapses in leadership and judgment earlier in the year, including the loopholes in the bail-out legislation that allowed for groups such as AIG to use part of the money to pay high-level bonuses for systemic failure. It would also explain why the supermajority failed to place enough (if any) stipulations in the bailout legislation that tied interest rates in the repayment of bailout loans to job stimulation and small
