Unhealthy Skepticism of Obamania

I have been more than once accused of being a skeptic of the unhealthy variety. Show me a plan by even the smartest people you can name, then tell me they work for the federal government, and I'll find something to take exception to. In the current "Obamania", I stand a pariah-- shunned by popular opinion. I am a "negative Nelly" clearly in need of re-education. But if there is one thing we know, manias tend to end badly; Obamania will be no exception.

Jim Vandehei and John Harris claim to be skeptics of the healthy sort. In their politico.com article, "Seven reasons for healthy skepticism", they make some worthwhile observations. Allow me to, in a few cases perhaps, add some trans fat to their analysis.

Reason 1: The Genius Fallacy

Vandehei and Harris note the recent fall of the two great geniuses of near past, Robert Rubin and Alan Greenspan. Greenspan, the "Maestro", admitted that he didn't see the recent bubble in the housing market and, if he had, wouldn't have known what to do about it. Robert Rubin, treasury secretary under Bill Clinton and lately of Citigroup, admitted that he didn't know what at a Collateralized Debt Obligation (CDO) was (he later recanted, judge for yourself whether you believe him). This is not a crime except Citi was up to their ears in them and they are a big part of Citigroup's current status as a basket case. Obama's main economic guru, Larry Summers, is a Clinton era retread and Rubin protege. His answer so far to our economic problems could have been concocted by a fifth grader (no insult to fifth graders, they're only 10 years old): if we can make all the money we want and spend it, why not? The record of geniuses in finance is not encouraging; remember Long Term Capital Management, the geniuses who went bankrupt in the late nineties using the same econometric nonsense that the geniuses at the credit rating agencies used to take the subprime or interest-only "mortgage science projects" of the late housing boom and turn them into AAA-rated securities, CDOs. "Finance is too important to be left to geniuses" says James Grant.

Reason 2: The Herd Instinct

Agreeing with my last post, V and H say that "Some of Washington’s biggest blunders occur when the government moves to do big things with big support." Again, "bipartisan" is a word which should create anxiety rather than sooth.

Reason 3: We Are Broke

In more ways than one. Social Security is one problem rapidly approaching--Medicare is even bigger. A $2 trillion deficit this year should make a thinking person shudder, if he is even capable of comprehending it.

I'll leave the rest for your perusal. Rest assured that when everyone is utterly convinced they know the way forward, chances are we are headed for a major reversal. In public, Obama exudes confidence. Hopefully he is not so naive as to believe his own bluster. We cannot simply hope our way out of our mess.