Deregulation? -- Are You Kidding Me?

Now the latest blame game maneuver is to argue the BP Oil Spill is the result of "de-regulation." What a joke? There has been no deregulation .... not one little bit regarding offshore oil exploration. In fact, what the BP Oil Spill shows, which we already knew, is that regulation is damaging, except when it's irrelevant. It didn't stop the spill and it won't stop future spills. Regulation doesn't work.

The reason BP was drilling for oil 5,000 below the surface was precisely because of regulation, forbidding oil exploration in shallower water. Somehow the regulators thought it would be safer if they moved the drilling further out. So much for the regulators. If this drilling had been down where it should been done, in the forbidden shallower waters, then the spill would be a relatively easy fix. But, the regulators won out, Congress won out, the President won out....and now we have an unfixable leak 5,000 feet down. Where is the de-regulation?

This is similar to the nonsense about the rating agencies. The rating agencies only gained power when the SEC mandated their usage by the debt markets. Why did the SEC do that? Is that de-regulation? It was an absurd thing to do. There are plenty of independent research operations to pass judgment on debt issuance, but the SEC put them all in limbo in favor of the rating agencies. Basically the SEC gave the rating agencies a monopoly and pushed the free market out of the way. Great move! Is that de-regulation?

Regulation doesn't work. The market works. BP will fix the leak because it is in their economic interest to do so. Politician will continue to spout nonsense, because that's what they do.

Oops .... Spoke Too Soon

Obama could not resist. After having calmly left the fixing of the leak to BP, now Obama has bowed to the talking heads and begun to demonize BP. That won't help anybody. BP's efforts to cap the well should be supported. What Obama should be working on is the clean up. Instead Obama is busy conjuring up sound bites to try to deflect blame away from himself and on to BP and on to George Bush.

Too bad. This is a time when all Americans should ban together to help our coast lines recover from this disaster. Time spent on demonizing other folks in the hope of political gain is time not spent trying to get to a solution for the most horrifying ecological disaster of our time.

Shame on Obama and shame on any politician -- Republican or Democrat -- trying to use this tragedy for political gain.

A Tale of Two Cities: Memphis, Tennessee

Michael Powell's article in today's New York Times is a painful snapshot of what happens when government tries to "do the right thing." This article chronicles the plight of black residents of Memphis who, like black American across the US, were lured into an over-priced housing market and then crushed by foreclosures. It was deliberate government policy that pushed many low income Americans into housing that they could not afford. We have Chris Dodd, Barney Franks, Bill Clinton, and George Bush to thank for much of this. These politicians and others, under the delusion that everyone in America needed to be a homeowner, encouraged and, in some cases, insisted that, Fannie and Freddie be used as vehicles to push the poor into expanded home ownership. What did they care if a future recession would bring this entire house of cards crashing down? This was the Memphis housing boom -- the first city -- spurred on by deliberate government policy.

So, the inevitable happened. Now, with the administration openly attacking mortgage lenders, the mortgage lenders are fighting back -- with foreclosures. Who gets caught in the middle -- the low income Americans fighting to make their way into the middle class? As the article by Powell points out, decades of economic gains were squandered by these misguided government policies -- policies which remain in place and are unaffected by FinReg. This is the second city of Memphis -- the recession-plagued Memphis that inept government policies have plunged into economic darkness.

When will we learn that government cannot create prosperity? Only individual Americans working and saving can create real prosperity. But, that requires government to get out of the way. It's a shame that the Memphis black community has to be a poster child for government's failures.

Silliness about the Eurozone

Why, when there is a problem, do people think there is some quick fix. Is it supposed that investors are stupid? Investors can see that Europe is broke and that there is no way to "grow out" of their indebtedness. Since they can see this, investors are beating a path to the exit. Who wants to own sovereign debt when you know that the borrowers cannot ever pay you back? Simple arithmetic, melded with modern demographics, make it clear the Eurozone is financial toast. There is no way short of bankruptcy for Europe to expunge it's enormous debt. The question now is only how big the bankruptcy will be and who will get stuck holding the bag. There really aren't any other questions worth asking. And there is no quick fix.

Oil Spill is not Obama's Fault

Anytime something unfortunate happens these days, we seem to spend all of our time looking for people to blame. Politicians preen before the camera "to show their anger." What are they angry about?

The idea that politicians have to "show our pain" when there is a problem, means that instead of dealing with the problem, we spend all of our time trying to show how angry we are and how angry we are at whoever we think "caused" the problem.

James Carville's rant against Obama this week is an example of stupidity in action. Just what exactly is Obama supposed to do. Carville, as usual, is all emotion and no thought.

The Gulf Oil Spill is an unfortunate accident of historic proportions. It is useful to know what caused it, so that, in the future, we can design ways to avoid such spillage in the future. We need calm, not hysteria. We need solutions, not the blame game.

Obama, interestingly, was on the right track in his initial reactions to this tragedy. He left the clean up operation to BP. That's the right solution. BP has an enormous incentive to get this under control. Politicians look to get elected. But, BP is the only entity with the expertise and incentive to solve this problem. Give them support and get this thing fixed. Afterwards, then you can go on talk shows and bitch and bitch and bitch. But, that sort of behavior is not helpful now.

We need offshore drilling and we need to think hard about how to prevent future accidents. But, they will happen anyway. Things happen. Dealing with such problems as an emotional outlook to vent frustration is not helpful.

On this one, Obama is innocent.

Geithner in Europe

If you have read Andrew Sorkin's book published last year, "Too Big to Fail," you know already that Geithner shoots from the hip. His solution, no doubt with the blessings of Ben Bernanke, is to throw as much government at a problem that you can and to bail out everyone in sight. Laws, history, patience go out the window with Geithner. Largely untrained in economics, Geithner nevertheless wanders the world lecturing the Chinese and now the Europeans about how the government should steer their economies. No economy in the history of the world (with the possible exception of Singapore) has ever done better because of an active government policy. The US in the 1930s is a great historical testament to the damage that the government can do an economic recovery. The current period will be another testament to the foolishness of government's response to a crisis.

If they are listening to Geithner, this does not bode well. He never believes in making foolish investors pay the price of their foolishness. Bankruptcy is a word he doesn't understand. Instead he believe in putting the taxpayer up front and center. Europe is a big enough mess without Geithner giving them advice. (The Chinese, no doubt, did not listen to him. They should be fine).

The Inevitable Consequences of Obama & Merkel Policies

Bailouts don't work. Stock markets, globally, are collapsing as they assess the full consequences of the leadership of Barrack Obama and Angela Merkel. Both these leaders think that politics trump economics and they are both wrong. One is a left wing idealogue and the other is a right wing idealogue, which just goes to show that bad policies transcend ideology. Even among commentators in the US revered as "conservative," bad economics is on display: Charles Krauthammer, Larry Kudlow, Peggy Noonan and Robert Samuelson all supported both the TARP and the Merkel-led Eurozone bailout policies. (Much-maligned Sarah Palin has been right all along).

Fear and ignorance are not good guides to economic policy. Free markets have no trouble recovering from bankruptcies and unemployment and they recover quickly if not impeded by foolish government policies. We are now awash in foolish government policies. So, the recovery process is thwarted thanks to Obama and Merkel (and others supporting their foolishness).

While today's markets will be tough, somewhere in here the stock markets will find regain their footings, although look for markets to be pretty volatile for a while. After all, government economic policies are pretty volatile. Eventually, even markets hobbled by Obama and Merkel will recover. It may be time, after today, to buy the stock market again.

I would be a buyer of US stocks today at the close of the market.