The seeming indifference of this Administration to the steady and precipitous decline of the market since President Obama’s election should surprise no one. One has only to look at the President’s past to gauge the prism through which he sees the present… and the future.
Many on Wall Street and Main Street voted for Obama hoping that he would be bipartisan, above politics, and, for many, rein in spending and deficits. They thought his left-wing associations and votes were purely the artifact of necessity and political ambition. When the credit and liquidity crunch hit, they thought Obama would be smart enough to fix it (which presumes, of course, that it can be “fixed”).
But this was a triumph of hope over observation. We have elected a president who has no real business or investment experience. His only notable for-profit venture was selling his book; as a law professor, community organizer, and legislator, he operated in redistributionist worlds where wealth, garnered from contributions or taxes, is received and redistributed. In those spheres there’s a seemingly bottomless well of funds, but unlike the for-profit world there can be a disjunction between your customers and your funding. At a non-profit, revenue comes from cajoling funders (who care about students or community residents, but who are not themselves the users of the non-profit’s services); in government, revenue is derived by forcing taxpayers – many of whom are not that legislator’s voters – to pay more.
In those worlds, wealth isn’t created; it’s seen as a fixed pie, and some slice is taken from those who have and given to those who haven’t.
The mentality inherent in “social justice” activism is also revealing. Created by radical leftist and union organizer Saul Alinsky, community organizing tends to eschew the hard work of helping individual lives with such boring bourgeois approaches as better education, development of job skills, encouragement of marriage, and the engagement of fathers in their children’s lives. Instead, social justice is about co-opting existing institutions and instilling collective grievance and victimhood. Practitioners of “social justice” encourage beliefs as that if the utility bills are too high it’s because “the system” is deliberately oppressive, or if there’s not more employment of members of the community it’s because employers are racist.
That’s the same mentality that doesn’t care “what some derivatives trader” on the Chicago Mercantile Exchange worries about – which was the response of the White House to CNBC’s Rick Santelli calling out the unfairness and moral hazard in the Administration’s mortgage plain. To the social justice mindset, this is not viewed as fellow American’s suffering, but with schadenfreude: traders are part of the system that is to be blamed, and if they suffer, it’s due and owing.
There’s another Alinsky principle that many of his adherents appreciate: issues and events are not so much important in and of themselves, but for the way they allow you to grow and strengthen your organization, broaden your membership, and leave you better positioned for the next fight.
That is exactly what the Democrat’s recent, rushed, massive, partisan, unread, and barely stimulating “stimulus” bill accomplished: they gained more money for their organization, expanded their dependent constituencies, and used the “crisis” to push through proposals that with daylight would have slunk back under the rocks from whence they came.
Continuing that crisis will allow them to do more of the same. It may be that President Obama is talking down any recovery and loving that word “crisis” to buy himself lowered expectations and time. But it may also be that the more people are told that markets (rather than congressional interference in mandating the making of bad loans) are to blame for the mortgage mess, and experience continued uncertainty, the better positioned those with activist agendas will be. As Alinsky wrote in Rules for Radicals
“There's another reason for working inside the system… Any revolutionary change must be preceded by a passive, affirmative, non-challenging attitude toward change among the mass of our people. They must feel so frustrated, so defeated, so lost, so futureless in the prevailing system that they are willing to let go of the past and change the future. This acceptance is the reformation essential to any revolution.”
We don’t have a credit problem or a liquidity problem – those are only symptoms. We have a severe confidence problem, one which is being exacerbated into a crisis by every move Washington makes. Confidence will only be restored and the recession bottom when the market is allowed to value those bad debts which are unknowns, but the current powers that be on Wall Street and Washington, each have their own reasons for not going there. Those who thought they were electing a savior may soon realize that not only is President Obama no messiah for the American economy, but he wouldn’t want to be a savior even if he could be. It’s time to prepare for a long and ugly ride.