Market Shrugs Bank Announcement

THIS IS when you start to worry. The Obama administration announces its determination to shore up the banks, and the market shrugs. Well maybe the market will think it over.

According to Binyamin Appelbaum the government is easing up on the banks.

The federal government will ease the terms of its investments in more than 350 financial institutions to increase the benefit of the taxpayer dollars while reducing the cost to the banks, regulators announced this morning.

"The government will ensure that banks have the capital and liquidity they need to provide the credit necessary to restore economic growth," said a joint statement issued by the Treasury Department, Federal Deposit Insurance Corp., Office of the Comptroller of the Currency, Office of Thrift Supervision and Federal Reserve.

Hmm. Things must be worse than we thought. So now the market is saying that we need more than joint announcements. We need concrete actions that demonstrate the administration’s determination to heal the credit system. Talk won’t do it.

Here’s a suggestion. Kill the stimulus bill and kill the bailout of the ten percent who can’t afford their mortgages. Before we butter up the Democratic faithful we’ve got to get the banks right side up.

You begin to see the cost of the Obama administration’s first month when it concentrated on sluicing money at its base instead of hitting one out of the ballpark on economic recovery.

The economy is, to an extent we don’t always appreciate, is a question of confidence and trust.

Yet everyone thinks that businessmen are crooks. We can thank the great political ascendancy of the last century, the progressive educated elite, for that. They have written in a thousand books and a thousand movies that businessmen are crooks and only progressive politicians really care about people.

Well, they are wrong. Business is, more than we know, built on trust. In business, you do whatever it takes to deliver good product to the consumer. And politics, as we’ve always suspected, is built on ruthless fighting and competition for the levers of power. You do whatever it takes to get elected. Notice the difference.

As the Obama administration plays out, we will see how much this fundamental misunderstanding of the nature of business and economic activity will mitigate the success of President Obama.

The problem is, of course, that when the politicians screw up, the people get to pay for their mistakes.

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Christopher Chantrill blogs at www.roadtothemiddleclass.com. His Road to the Middle Class is forthcoming.

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Faith & Purpose

“When we began first to preach these things, the people appeared as awakened from the sleep of ages—they seemed to see for the first time that they were responsible beings...”
Finke, Stark, The Churching of America, 1776-1990

Mutual Aid

In 1911... at least nine million of the 12 million covered by national insurance were already members of voluntary sick pay schemes. A similar proportion were also eligible for medical care.
Green, Reinventing Civil Society

Education

“We have met with families in which for weeks together, not an article of sustenance but potatoes had been used; yet for every child the hard-earned sum was provided to send them to school.”
E. G. West, Education and the State

Living Under Law

Law being too tenuous to rely upon in [Ulster and the Scottish borderlands], people developed patterns of settling differences by personal fighting and family feuds.
Thomas Sowell, Conquests and Cultures

German Philosophy

The primary thing to keep in mind about German and Russian thought since 1800 is that it takes for granted that the Cartesian, Lockean or Humean scientific and philosophical conception of man and nature... has been shown by indisputable evidence to be inadequate.
F.S.C. Northrop, The Meeting of East and West

Knowledge

Inquiry does not start unless there is a problem... It is the problem and its characteristics revealed by analysis which guides one first to the relevant facts and then, once the relevant facts are known, to the relevant hypotheses.
F.S.C. Northrop, The Logic of the Sciences and the Humanities

Chappies

“But I saw a man yesterday who knows a fellow who had it from a chappie that said that Urquhart had been dipping himself a bit recklessly off the deep end.” —Freddy Arbuthnot
Dorothy L. Sayers, Strong Poison

Democratic Capitalism

I mean three systems in one: a predominantly market economy; a polity respectful of the rights of the individual to life, liberty, and the pursuit of happiness; and a system of cultural institutions moved by ideals of liberty and justice for all. In short, three dynamic and converging systems functioning as one: a democratic polity, an economy based on markets and incentives, and a moral-cultural system which is plural and, in the largest sense, liberal.
Michael Novak, The Spirit of Democratic Capitalism

Action

The incentive that impels a man to act is always some uneasiness... But to make a man act [he must have] the expectation that purposeful behavior has the power to remove or at least to alleviate the felt uneasiness.
Ludwig von Mises, Human Action

Churches

[In the] higher Christian churches� they saunter through the liturgy like Mohawks along a string of scaffolding who have long since forgotten their danger. If God were to blast such a service to bits, the congregation would be, I believe, genuinely shocked. But in the low churches you expect it every minute.
Annie Dillard, Holy the Firm

Conversion

“When we received Christ,” Phil added, “all of a sudden we now had a rule book to go by, and when we had problems the preacher was right there to give us the answers.”
James M. Ault, Jr., Spirit and Flesh

Living Law

The recognition and integration of extralegal property rights [in the Homestead Act] was a key element in the United States becoming the most important market economy and producer of capital in the world.
Hernando de Soto, The Mystery of Capital

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