Bainbridge nails it on Obama's "financial markets" speech today

Having been alerted by the MSM that Barack Obama planned a major speech from New York City today on the financial markets and his would-be Administration's plans to deal with them, I hunkered down to watch the speech with a vague thought of writing a blog post about it. I can understand why after a few minutes, the main CNN and Fox News channels cut away: there are supermodels to obsess over, after all, and car chases, and all of the other crap they use to fill 90% of their daytime broadcasting hours. To my dismay, however, not even the cable/satellite financial channels carried the whole speech. Here we have the likely nominee of the Democratic Party, who most odds-makers still peg as the likely next POTUS, announcing how he plans to address the nation's economic problems (which all of the news channels have been obsessing about, continually and hysterically if only intermittently, for months) — and none of those hundreds of channels can spare him 30 uninterrupted minutes? Sheesh, if a financial news channel can't cover that, what damned good is it?

My confident guess is that the Obama campaign's economic advisers collaborated for several weeks on this bundle of observations, criticisms, and campaign promises. But TelePrompter or not, the candidate did it due credit with his delivery, and he seemed as sincere as I've ever seen him (which could lead me into the proverbial whole nuther post, but I'll save that for another day).

Anyway, it turns out that UCLA Law Prof. Stephen Bainbridge has already written the post I wish I had, and he's done so from a position of better authority and with more erudition than I would have managed. His post is entitled "Parsing Obama’s Financial Regulation Speech," and it's exactly that — a very, very careful and detailed reading and analysis of what was, indeed, a remarkably detailed political speech. I highly recommend it — but it's too rich to meaningfully excerpt here at much length, so my recommendation is that you follow the link and read the whole thing.

I will amplify, however, on one of Prof. B's observations that I think is hugely important for voters who are concerned about the biggest of big economic pictures:

Obama also posits that:

We must develop and rigorously manage liquidity risk.

We who? Some Washington bureaucrat? Enormous amounts of real wealth have been created by innovative financial instruments and transactions. Inevitably, those transactions pose some degree of liquidity risk. Are we to cut financial entrepreneurs off at the knees?

That's just one sentence that Prof. B plucked out, but it's a prescription that Obama repeated over and over in the speech (e.g., his insistence that "at the very least, these new regulations should include liquidity and capital requirements").

That is an incredibly arrogant statement, one that completely undercuts the rote lip service to free market principles at the beginning of the speech. You can only make a case for substantive government regulation of liquidity and capital — risk and leverage — if you believe that the proposed regulators are consistently smarter than the market itself. The problem is, friends and neighbors, that no regulator is that smart, or even remotely close to it. And every time that government regulators take power upon themselves, via substantive regulation, in the conviction that they will show themselves to be smarter than the market, they inevitably screw things up worse. That is the transcendent economic lesson of the Twentieth Century, upon whose ash-heap rest the state-planned and -controlled economies of the Communists and Socialists, most prominent among them the U.S.S.R.'s.

I'm not saying Barack Obama is a wild-eyed Marxist. But he definitely shares their same basic conviction — the conviction that "I'm the smartest guy here, and I can fix all of this if you'll just give me the power." (A goody-basket of financial treats and preferences is then immediately promised in order to persuade the electorate to give him the power.) As with the rest of Barack Obama's plans and platform, when you peel away the attractive messenger and articulate delivery, the underlying policy today showed itself to be sadly typical of hard-left Democratic politicians for the last seven-plus decades: pro-regulation, anti-free market, and arrogant as hell in their certainty that they (and they alone) can "fix" your problems if you'll just put your trust, your life, your vote, and (via your vote) your wallet into their hands.