I have been part of an email correspondence group for a couple of years now which includes a number of strong public policy thinkers. One of the best is a man named Francis Cianfrocca (aka “Blackhedd”) who writes regularly at Redstate. He has been spot on with regard to the current financial crisis. I’ve read far better stuff from him in my inbox than I’ve been able to find at CNBC or Fox Business News. All of this is to say that he is plugged in to the financial community and has a strong analytical mind for making sense of it all.

Here is his latest. And here is a taste:

Obama could sweep away a lot of this uncertainty and unreasoning fear with no more than a ten-minute news conference.

He could stand up, with the towering Paul Volcker, the sour-pussed Larry Summers and the sardonic-looking Tim Geithner standing behind him, and say the following:

“Ladies and gentlemen, I’ve consulted at length with my economic team. We’re acutely aware that our economy is facing great uncertainty. We understand that our system is a capitalistic one. We intend to do whatever it takes to get business and capital working again, for the sake of every consumer and working person in America.

We also recognize our critical responsibility to the rest of the world. As the pre-eminent economic power, it’s up to us to lead global markets back to health and prosperity.

I’m announcing the following key decisions, which we will stand by until our markets are back to normal, employment is growing, and our economy is healthy again:

All tax increases on capital, dividends, and business income are OFF THE TABLE.

All protectionist legislation, including increased tariffs and import duties, are OFF THE TABLE.

All new regulations, mandated costs and taxes on businesses, including export businesses, are OFF THE TABLE.

That is all. Thank you.”

If Obama were to give this speech, you’d see explosive market rallies, and everyone would heave a big sigh of relief.

So how about it, Mr. President-elect?

Sounds like some first class “Nixon goes to China” action to me.


  • Daniel

    While this press conference (and follow-up action) would be, indisputably, the best thing to happen to America in the last 150 years, the author has drawn a dangerous conclusion from the idea. He supposes that this would send the stock market back towards 14k points, and that lending would begin again, etc.

    I think rather that, were Mr. Obama were to make such (again, heroic and laudable!) decisions, we could expect to see the markets continue to crash (perhaps even more rapidly) and the economy to head deeper into a recession / depression. That’s right: businesses failing, the stock market falling, and a continued deleveraging. Chaos and hurt—for a time.

    What the author misses is that this would be a *good* thing and *precisely* what the country needs right now. Economic bubbles cause all kinds of malinvestments that *must* be liquidated and repositioned *before* true recovery can take place. Everything Bush (and Greenspan and Bernanke) have done—and everything Obama plans on doing—is designed to *prevent* this very thing, after all.

    I hope we see a little deeper analysis from Acton on this in the future. I’m always agreeing with this blog (and the articles they write), except insofar as they don’t seem to me to get to the root of the issue. They are, as it were, hacking at the branches of evil, not striking at the root.

  • MattNC

    I’d love to believe – or even to hope – that Obama might have the sense to take such a brave stand. (Though I agree with commenter Daniel that even if he did, there’s still fundamental corrections that must take place before the economy can begin to grow in a healthy fashion.) Moreover, the unfortunate truth, I fear, is that even if Obama knew this would be the right thing for him to do, he is, at heart, a statist, and he sees this whole debacle as an opportunity to increase the power and intrusion of the state into the marketplace. He’d be a fool to pass up this historic opportunity to institute his ideological aspirations on a grand scale. From the socialist-statist perspective, this is the great harmonic convergence of fear, fiscal malfeasance and political disaster that must make most Machiavellians drool.

  • Roger McKinney

    I agree with Daniel and MattNC. A speech like that would help only if the main cause of the crisis is “uncertainty and unreasoning fear.” It’s not. Fear and uncertainty are the effects, not the cause. The cause is misallocated resources, which in turn was caused by the Feds keeping interest rates too low. A thousand speeches won’t reallocate or liquidate bad investments.

    In addition, the speech only mentions new regulations and taxes. It says nothing about removing the heavy burden of existing ones that contribute to instability and crisis.

  • Roger McKinney

    PS, the US is not a capitalist nation. It’s mostly socialist and only slightly less socialistic than the socialist countries of Europe. Falsely calling the US capitalist confuses people and opens the door for socialists to advocate more socialism. The current mess has everything to do with the dominance of socialism in the country and the extreme weakness of what tiny bit of capitalism is left.

  • AJM

    I agree with Daniel and Roger. As we all know, there is a long history of government interventionism that contributed to the recent “collapse”. The boom/bust pattern is most definitely a result of the failures of central planning. I suggest we ROLL BACK the legislation (untie the binds) that restrains commerce. Tax laws alone represent the worst of the lot. The markets will react more favorably in a simpler and unfettered operating environment.