FDR: What Have You Done For Us Lately?
Another reader of The Corner sent an interesting email.
... This is not 1932. Despite having Sarbanes Oxley, the SEC, the FDIC, CRA, TVA, Social Security, Progressive Taxation, Medicare, Medicaid, a high Corporate Tax, the EEOC, tens of thousands of pages of federal regulations, and a $3 trillion plus federal budget, we find ourselves in a severe banking/credit crisis. For almost 3 weeks Paulson and Bernecke have pulled every financial rabbit out of their hats but they still cannot stop the panic on Wall St or the liquidity crisis. Despite having a federal regulatory apparatus that would have been unimaginable in 1929, this nation experienced 2 rather huge market bubbles (Tech stocks 1995-2000, and Real Estate 2003-2007), and all of the greed those kind of bubbles produce.
... The Fed cannot keep pouring cash into the markets; nor can it continue to spend taxpayers money like a teen with his/hers father’s Visa Card on a shopping mall bender. The federal deficit is already at a level no one can begin to imagine. The market has already punished some of the worst offenders, with probably a few more banks waiting in the wings. Who will be left to regulate? Will higher taxes, stiffer government regulations and intrusions work? Will resurrecting Glass/Stengall restore market and credit confidence? This is not 1932. The government is now the prime source of insurance and mortgages. Could it be that both the financial sectors and public sectors got too large to manage? Could it be that the new robber barons are not sitting in boardrooms, but on Capital Hill and in K-Street offices? Perhaps the panic’s root cause is that no investors can trust a financial system that is filled with so many conflicts of interests?
I think it is now dawning on some that there will be no government "solution" to this mess. The continued panic and credit crunch illustrates this. FDR came in to a federal government with a budget just a tad larger than PBS's budget today. Seventy six years and trillions of dollars later, we have come to the end of the FDR model.
That sounds about right. It would be hard for government to spend more than it already does (or is planning to). Somehow I don't think that even more spending will rescue us.
This entry was tagged. Government