Team Obama rounds up the villains

Ron Hart Ron Hart is a libertarian humorist and author who can be reached at Ron@RonaldHart.com.
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To implement its agenda, Team Obama develops a narrative according to its needs. Then they send the marching orders out to their brethren in the media, who faithfully run stories sympathetic to the goal du jour. “Deal with us or we take you down,” Obama tells his targets in his best Chicago-style politico-speak. “If you are not at the table with us, you are on the menu.”

His current initiative blames Washington’s lack of effectiveness on greedy capitalists. So the government, in a 3-to-2 partisan SEC vote (conveniently before regulatory legislation), makes its macho statement by taking Goldman Sachs out to the prison yard and beating them in front of the other financial firms so they do not fight new regulations. Then Obama gets on Air Force One (which costs us about $300,000 each time he flies and an extra $25 if he checks a bag) to go out and sell his envy and “eat the rich” agenda to Americans who do not understand markets.

The most recent coordinated campaign is an attempt to blame “Wall Street” for the housing market downturn. Never mind that the federal government, through the Community Reinvestment Act and Freddie Mac and Fannie Mae, pushed sub-prime loans. According to Fannie Mae’s Ed Pinto (a name which had to help that quasi-government agency burst into flames), they were responsible for $2.7 trillion in sub-prime/Alt-A mortgage exposure — three times the entire Goldman Sachs balance sheet.

The Clinton administration bragged about increasing loans to low-income borrowers, and actually threatened to sue banks in order to force them to treat welfare and unemployment benefits as “income sources” in qualifying for a mortgage. In the name of social justice, loans were made to people who lied on the application and stood little chance of being able to make payments.

Yes, Wall Street packaged these increasingly questionable loans and sent them downstream to those chasing high yields. Politicians need to blame someone other than themselves, and they found their villain in Goldman Sachs. Then they just had to find a crime. So, they looked through 2 million documents from deals executed over the last few years and found a provocative deal between two very sophisticated investors. One, a German bank, thought the housing market would continue to do well; the other thought it was treading on thin ice. With 20/20 hindsight, they say it was set up to fail. So they come to the aid of the German bank that has yet to complain. That should help Obama when he runs for President of Europe.

Once any trend goes on too long and becomes unsustainable, anyone is completely within his rights to short or bet against that investment. It is how markets are made. Every stock is sold by someone who thinks its value is going down and bought by someone who thinks it is going up.

It is the same way your bookie makes a football game bet. Some of his customers think Green Bay will beat Detroit by more than 18 points, and others do not. The bookie facilitates the trade, sometimes taking a position to accommodate customers. There are two sides to every trade, and that is what is called a market.

If you think you can stop someone from buying something “set up to fail,” how do you explain Detroit Lions season ticket holders?

In capitalism, if a company does not make the right decision and succeed, it goes into bankruptcy. On the other hand, when government does not succeed, it just gets more funding and grows bigger. And that about sums up this credit crisis situation.

Does anyone miss Lehman Brothers or the AMC Gremlin? There is something cleansing about economic Darwinism.

The government’s case against Goldman Sachs is that they knew the housing market was destined to fail. You know what is also destined to fail? The debt the U.S. government continues to issue and cannot repay. People are betting on that now, and Greece may have just greased the skids. If the betters are right, they get a free ticket to be hauled before Congress someday.

Failure cannot be Congress’ fault for spending too much. It has to be some other villain — never them. It was frightening how little the Senators who mauled the Goldman execs knew about how markets work. It was even sadder to see how expedient they are in singling out anyone but themselves to blame for their failures.

A syndicated libertarian op-ed humorist, Hart’s columns appear in 40 papers nationwide. His recent book is available on Amazon or at www.RonaldHart.com. His email is Ron@RonaldHart.com