BUD BREWER
One Man's Opinion
The Arrogance of Power
The Triage of Arrogance
During Congressional hearings, they sit on a dais elevated two or three feet above any witness that is testifying voluntarily and typically show little if any respect for the individual or panel of witnesses. I’m not talking about when a Committee is investigating an actual or potential defendant in a criminal act, I’m talking about those meetings where a witness is educating the Congress and appearing voluntarily. No, there is something that happens to those that enter government service or run for and are first elected to office. The success in their campaigns seems to cause them to become even more narcissistic than they otherwise might be.
There is a quote from Lord John Emerick Acton (1834-1902) saying, “Power tends to corrupt and absolute power corrupts absolutely.” Well, Barack Obama and his fellow Democrats took office with absolute power one year ago and as we look back, not just at the lack of his governing through a two party system, but more at the effectiveness or lack thereof by his 60 seat Senate majority to get important legislation passed, it has become clear that he seeks to have legislation done behind closed doors with little or no debate or the transparency he campaigned on. This combined with attemps to posture the United States as a conciliatory power that has made terrible offensive mistakes and now wants to be more accomodating to countries like Iran, Yeman, North Korea, and other nations dominated by dusruptive forms of Islamic or totalitarian governments. His unsuccessful efforts to influence our foreign allies to join with America in the pursuit of stronger anti terrorist policies can explain why voter confidence in his ability to govern is cascading down from the high level present at his inaugural.
During my lifetime, perhaps with the exception of the Roosevelt era, every successful president has governed from the center of the political spectrum. It is true that this was usually required to get bi-partisan support for any proposed legislation simply because they could not get it passed without them. But in most cases there was genuine regard for the leaders of the other Party and many of its members. I can remember how Ronald Reagan and Tip O’Neil, the Speaker of the House at the time of Reagan’s election, would be able to have discussions on serious matters, laugh at each other’s jokes and slowly but surely gain respect or at least a modicum of appreciation for the other’s point of view.
In the current period, Americans are increasingly becoming polarized. Is that part of a plan or a consequence of Obama’s leadership? If a plan, we better watch out because the next step is a potential non reversal of government authority over our everyday life and a diminishment of freedom, liberty and our standard of living.
After listening to the Barney Frank crowd express their ideas for regulating the financial industry into a state of atrophy and steadily losing hope that our free enterprise system will endure, I was heartened as I watched and listened to Frank Blankfein (Goldman Sachs CEO) and Phil Angelides (former California State Treasurer and Chairman of the “Financial Crisis Inquiry Commission Committee”) exchange views on what roll Wall Street played in the near Collapse of the Global financial system in 2007-2008. The reason I was heartened was that there in front of the World, Blankfein laid out a clear explanation, with all its strengths and weaknesses, of what capitalism is, how it works and why it is so effective in fueling economic activity for the betterment of American society. He went through just how investment banking, capital markets, brokerage and financial asset trading works and how it fuels capitalism. He described the role of the investment banker serving one client’s need for raising capital and then serve the needs of another through other divisions of its own structure to distribute it. Usually the investment banker is joined by others to provide the means of distribution of that financial product, (i.e. stock, bonds, or other securities) to or through investment brokers or advisors responsible for managing the investments of institutions and individuals. He explained that in this process, the investment bank, acting alone or heading a group of other underwriters, assumes extreme risk related to the process of underwriting and distribution of financial products. During this time, its equity capital becomes increasingly leveraged as its ratio of equity to its liabilities could and does require effective risk management to protect its shareholder interests. He said the demand for financial instruments to fund the need for mortgage capital necessary to enable individuals to purchase homes did cause his firm and most firms to build liabilities to a risk related level of 40-50 or even higher multiples of its equity. Recognizing that increasingly those applying for loans to buy homes were not going to be able to service the debt called for (so called sub prime mortgages) the firm accelerated its effort to address its exposure to risk. But at the time there was a common belief that the underlying collateral (real estate properties)for these securities and their derivatives would continue to rise or at least hold its value. Nevertheless, since the inherent loss potential with such risk can and did threaten the equity value of Goldman Sach’s shareholders interests, they took appropriate steps to hedge those risks. Some of those steps involved the use of derivatives that effectively made the company’s position be a seller of comparable securities to those it was underwriting. It was at this moment that Phil Angelhides made his remark “It sounds to me a little bit like selling a car with faulty brakes, and then buying an insurance policy on the buyer of those cars.” In fact that isn’t far off the mark but it is no different than what any person, corporation, law firm or whoever would and should do when, attempting to manage potential liability risk exposure. They prudently transferred risk to counterparties.
Unfortunately, his comment was picked up by the media and headlined “Investigating panel rips Wall Street”. The question and the response is clear evidence that our current Administration along with most liberals in Congress and of course the fawning media does not understand or appreciate the process of free market capitalism and in fact assures that until a change occurs, we are doomed to the consequences of that ignorance,
One Man’s Opinion –Bud Brewer
Excellent article, it will be interesting to see the outcome of the mid term elections based on what we see with the current administration.
Great article Pop. Ironic that you wrote this the day before the huge upset in Massachusetts. Clearly, even the most liberal state in the country has had enough. I saw many interviews with voters last night who voted for Obama in 2008 and voted for Brown yesterday because they want to send a message to Washington that enough is enough. They are tired of the runaway spending and the backroom politics, the abuse of power with bribes and special favortism to their supporters. In other words, they are tired of the arrogance of power. The real interesting thing at this point is will the Obama administration, Reid and Pelosi, finally realize that this power and arrogance has to stop. Unfortunately, I don’t think they will.
Exceptional analysis Pop. As usual, I think you are right on the mark. The arrogance of the current leadership is as concerning a political reality as anything I can recall.
The focus on healthcare reform at a time when “it’s the economy stupid” couldn’t be more clear is coming back to bite them. Pelosi and her cronies continue to try and resuciate a public optioned healthcare reform even when Obama himself made it a last priority and 5 minute discussion in his SOTU unscores their arrogance that they seem to know better what we need or want.
The unwillingness to accept the “governing from the center” that has been successful in past administrations on both sides of the aisle will continue to polarize constituents until, as Patty rightly comments those constituents take them to task. It won’t happen too soon for me.