Obamanomics: The Impending Financial Disaster

From the AP June 20, 2009

WASHINGTON – President Barack Obama said Saturday that current financial rules exploit consumers and he put critics of his proposed overhaul on notice: "While I'm not spoiling for a fight, I'm ready for one." Obama used his weekly radio and Internet address to defend his recent proposal, which is intended to prevent a repeat of the breakdown that has sent the U.S. economy reeling. In the address, Obama focused on a consumer watchdog office that he wants to set up. "This is essential," Obama said. "For this crisis may have started on Wall Street. But its impacts have been felt by ordinary Americans who rely on credit cards, home loans and other financial instruments." The Consumer Financial Protection Agency would take over oversight of mortgages, requiring that lenders give customers the option of "plain vanilla" plans with clear and affordable terms. "It will have the power to set tough new rules so that companies compete by offering innovative products that consumers actually want and actually understand," Obama said. "Those ridiculous contracts — pages of fine print that no one can figure out — will be a thing of the past. You'll be able to compare products, with descriptions in plain language, to see what is best for you."

Maybe it's about time someone put Barack Obama on notice. He is, after all, the number one critic of free enterprise. It's been six months and so far his statist policies have failed to lift the economy by every measurement imaginable except the one in his head, where despite almost 10% unemployment, he has the audacity to claim to have "saved or created 150,000 jobs." This number, of course, is an illusion. Like all of the policy achievements in the Fauxbama's lifetime, it is unverifiable, plucked out of thin air and glossed over with soaring rhetoric, assuming theTelePrompter is nearby.

Let's be real. There is no recovery in sight. The economy shed more jobs in June and consumer confidence is at an all-time low. The stock market is still down from the day this president took office, way down from election day. All of this despite Obama's massive spending, regulation, and government interference in entire businesses and industries. All of this despite throwing Supersized Government at every problem and hailing it as the solution to our worries. All of this with Democrats in control.

Whether the President likes it or not, he has now taken ownership of this economy. He, along with Nancy Pelosi, mapped out the course. It includes record spending, quadrupling the deficit in one year, and putting us in debt as far as the eye can see. And despite this misery, with discretionary income shrinking, jobs lost, and the private sector being monopolized by his cronies, Obama now claims he wants to protect the American consumer?

Give me a break. This sounds like the language of Hugo Chavez, who claims to champion the poor while stripping opportunities from private companies and individuals, the ones who can actually create wealth. Every economic policy President Obama proposes will have a negative impact. The expansion of Barack's kingdom at the expense of private enterprise will cost consumers a lot in the long run.

HERE'S WHAT YOUR "OVERHAULS" WILL COST US, MR. PRESIDENT:

Your overspending means tax increases are just over the horizon. Fewer new businesses will be created and the ones that stay in business will raise their prices, since companies absorb these costs by passing them on to the consumer.

Your health coverage plan, if it includes a public option, will cause private insurance rates to increase until there are fewer private insurers offering fewer plans at more expensive rates. Some businesses may drop insurance for their employees altogether if you tax these benefits.

Your cap-and-trade scheme will cause energy to cost more, causing all goods to cost more, all food to cost more, and all transportation to cost more, eating up discretionary income, especially for working families and the elderly. Manufacturing jobs may move overseas.

Your spending sprees and massive money circulation will cause inflation. As a result, small companies will struggle or close, while big corporations with political connections (and federal bailouts) gain more market share. That means less competition in the marketplace.

Loans will become harder to come by and more expensive for people with good credit in order to subsidize the same type of questionable loans the government insists upon still making to those who can't afford houses, which got us into this mess in the first place. Credit cards will no longer be able to offer low rates to their most reliable customers in order to make up for strict rules on collecting from deadbeats.

Creating more red tape will not solve the problem. In fact, it will make the problem worse. Companies deemed too big to fail will devise new ways to game the system, with political connections mattering more than ever, as government takes advantage of its new relationship with big business and vice-versa. All that bureaucracy will make it impossible to hold anyone accountable. Products will hardly become more innovative, even by Obama's own definition he says the new options will be "plain vanilla." Since when was plain vanilla cutting-edge?

As for "those ridiculous contracts, pages of fine print that no one can figure out", have you taken a look at your own legislation recently, Mr. President? We're talking thousands of pages that no one in Congress can figure out or has even bothered to read in the stimulus bill, in the crap-and-trade legislation, and in a health care bill that is growing more complex with even more fine print by the day.

More broadly, Obama's changes would begin to reverse the easing on federal regulations pressed by President Ronald Reagan in the 1980s. Democratic leaders in Congress are promising legislation will get passed this year, but that depends in part on how Congress answers big questions about the overhaul, including the role of the Federal Reserve. "I welcome a debate about how we can make sure our regulations work for businesses and consumers," Obama said. "But what I will not accept — what I will vigorously oppose — are those who do not argue in good faith." By that, Obama said, he meant those who defend the status quo at any cost. "These are the interests that have benefited from a system which allowed ordinary Americans to be exploited," Obama said. The president said he would stand up for his plans, saying: "While I'm not spoiling for a fight, I'm ready for one. The most important thing we can do to put this era of irresponsibility in the past is to take responsibility now."

The changes President Reagan made in the 1980s are credited by most economists as leading to an economic recovery from this exact type of regulatory suffocation in the 1970s, creating 25 of the most prosperous years that any nation has ever experienced. New companies and industries were born. The middle class grew exponentially. Now we are about to kiss it all goodbye.

President Obama's policies will focus on keeping giant struggling companies alive for the sake of some false sense of stability, no matter how mediocre, and at the expense of new opportunities for new businesses. Wealth requires risk. Opportunity requires liberty. Obama doesn't favor risk, and he believes too much liberty is irresponsible, so we shall have neither.

As for the debate, a meaningful one will be impossible, because the president doesn't approach free markets in good faith. He doesn't want to discuss how much regulation is too much or when it becomes detrimental, but instead "how we can make more regulations work." If you don't accept this authoritarian premise, then he has already labelled you. You are "irresponsible", "favoring the status quo", and your character is under attack. You have been disqualified from participating.

Nothing like a Washington politician in favor of expanding government accusing a small business owner who wants nothing out of Washington of being a special interest. Just more phony posturing from the Fauxbama.