President Barack Obama proposed new limits on the size and activities of the nation’s largest banks, pushing a more muscular approach toward regulation that yanked down bank stocks and raised the stakes in his campaign to show he’s tough on Wall Street.
–“New Bank Rules Sink Stocks“; The Wall Street Journal (1/22/2010)
So, government’s iron fist is once again coming down (too) hard on private enterprise, imposing (more) bureaucratic red tape on businesses, and hurting job growth and the stock market.
Right?
Umm . . . well . . . not exactly.
If the Journal had asked me to re-write the lead, here’s what I would have said instead:
President Obama belatedly announced the first, limited steps to address the root causes of today’s economic melt-down: reckless Wall Street banks that have required trillions in taxpayer bailouts to deal with the consequences of their highly leveraged, bad bets — bets that have caused millions of Americans to lose their jobs, savings and homes.
In other economic news yesterday, Goldman Sachs announced blowout earnings from . . . making more, reckless bets with taxpayers’ money.
In my opinion, the only thing worse than ‘governing-by-poll’ is ‘governing-by-Dow-Jones,’ i.e., doing whatever makes the stock market go up, and refraining from whatever makes it go down — at least in the short run.
With the market now down a couple hundred points in the wake of the newly announced bank “reforms,” it will be interesting to see if Obama sticks to his guns.
P.S.: want a short-hand way to tell? Figure out how close (or far) Paul Volcker is standing from him (yesterday, he was standing at his side).
