Let's don't boil the frog

There is an old story that begins by asking, "How do you boil a frog?". As you may remember, the story goes on to say that if you drop a frog into a pot of boiling water, he will immediately jump out. But the solution to the problem is to put the frog into a pot of water at room temperature and then turn the heat on until the water begins to boil. Soon you will have a parboiled frog.

So where is this going? Well let's make the leap (no pun intended) from frogs to our banking system and the whole issue of private enterprise in the American economy. I am very fearful that the American people are now floating in that pot of lukewarm water without realizing that the boiling point is close at hand.

Over the past five or six months we have witnessed the most severe turmoil in our banking system and, hence, in our entire economy in the past seventy-five years. Economists and historians will no doubt spend decades analyzing the root causes of this whole situation so that perhaps future generations will not make the same mistakes. But what we do know is that this past fall our entire banking system suddenly found itself at the very brink of collapse, the results of which would been catastrophic for not just the United States but the entire industrialized world. Very quickly the Bush Administration and the Congress took action that has commonly been called, mostly by our media, the bank bail-out. Whether or not their action was exactly the right move is debatable, but there is no doubt that something had to be done quickly to restore some level of confidence in our banking system and, at least for a few months, that was accomplished.

Here is what gives me great concern. Since that first "bail-out" bill, called TARP (Troubled Assets Recovery Program), it has become obvious that addition action is necessary as unemployment has skyrocketed, banks have continued to teeter on the edge of failure and the entire economy has slipped into the worst recession in more than seventy-five years. Everyone seems to agree that an "economic stimulus" package is the prescription. But the devil is in the details. Most Conservative Republicans contend that any economic stimulus must include massive tax cuts that would put money back in the hands of the average American family that hopefully they would spend on goods and services hence kick-starting our economy. Unfortunately Congressional Democrats and the Obama Administration have put their primary focus on spending rather than tax cuts - primarily spending in the areas that liberal Democrats love, such as family planning (codeword for abortion), global warming and huge make-work projects. But in the past few weeks Democrats have shifted their attention back to banks - especially those handful of banks that have paid enormous salaries and bonuses to their CEOs or have otherwise spent money in ways that seem to the man-on-the-street to be wasteful. In a pure capitalistic system, those excesses would be corrected by the shareholders (the owners) through their representatives on the Board of Directors. But now that the Federal Government has billions invested in these banks, President Obama has issued an Executive Order that limits CEO compensation to $500,000. Sounds fair, doesn't it? But what is next? Will there be Executive Orders that specify how many vice presidents each bank can employ - or which company they can purchase their ATMs from - or what racial and gender quotas each bank will follow in their hiring? The point is, we are moving down the path to nationalization of our nation's banks. A system not unlike the old Soviet model where the state controlled the capital and therefore, the economic system of the country. The history of the latter half of the 20th Century will record the demise of that practice as a viable economic practice. No institutions are any more unpopular in the eyes of average Americans than big banks, big oil and our health care system, yet President Obama, Speaker Palosi and Senator Reid are marching us down the path that gives the Federal Government virtual control of these industries and very few of our citizens seem to have even noticed. No doubt there is tremendous room for improvement in the way that our nation's largest banks have been managed, but putting them under the control of the same entity that manages the IRS, the VA and the Medicare system is not the answer. Let's jump out of the pot before the water reaches the boiling point. What do you think?