Potter Isn't Selling; Potter's Buying!

It's a wonderful rerun:

As events continue to snowball in the financial sector, I can't get this scene- or my own discomfort- out of my mind.

I don't like to be cynical and I don't support conspiracy theories, but I am unhappy and very uncomfortable with the steps the government has taken in recent weeks.  There seems to be a lack of coherent logic combined with an unwillingness to face consequences and that's a very dangerous mix.

Consider:

Potter: George, are you all right?  Do you need any police?  Mobs get pretty ugly sometimes, you know.

“These are complicated companies,” one CEO said. Offered another: “We’re competing for talent on an international market.”

But President Barack Obama wasn’t in a mood to hear them out. He stopped the conversation and offered a blunt reminder of the public’s reaction to such explanations. “Be careful how you make those statements, gentlemen. The public isn’t buying that.”

“My administration,” the president added, “is the only thing between you and the pitchforks.”

Potter: George, I'm going all out in this crisis.  I've just guaranteed the banks sufficient funds to meet their needs.  They'll close up for a week and then re-open.

George (to Uncle Billy): He just took over the bank.

While the funds were mostly intended for banks that were weakened by the housing slump and the subsequent crash of credit markets, a significant portion of the $700 billion bailout ended up going to banks that described themselves as well-capitalized.

Now some of these banks with strong capital ratios are beginning to return the TARP funds to get out of restrictions like executive compensation caps imposed by the government.

...

In a meeting with top U.S. bankers on Friday, President Barack Obama did not instruct the bankers to stop considering an early return of some of the bailout funds but asked them to exercise caution in doing so.

...

"The restrictions that were put on us made it not the kind of capital we wanted to keep. We did not want to restrict the way we did business, it just was very difficult," Chief Executive Russell Colombo told Reuters by phone. 

Potter: I may lose a fortune, but I'm willing to guarantee your people,too.  Just tell them to bring their shares over here and I will pay 50 cents on the dollar.

The Treasury Department has decided to extend bailout funds to a number of struggling life-insurance companies, helping an industry that is a linchpin of the U.S. financial system, people familiar with the matter said.

...

The decision by the Treasury Department adds a third industry to the banks and auto companies that have already received bailouts from the government. While American International Group Inc. is a major insurer and is the biggest recipient of government money, its problems weren't caused by its life-insurance operations, but derivative bets that went bad.

...

A number of life insurers, including Hartford Financial Services Group Inc., Genworth Financial Inc. and Lincoln National Corp., struck deals last fall to buy regulated savings and loans so they could call themselves banks and qualify for government funds. Hartford and Lincoln have applied for TARP funds. Genworth said it has applied with the Office of Thrift Supervision to approve its thrift purchase as a step toward gaining access to the federal funds.

George: Don't you see what's happening?  Potter isn't selling; Potter's buying!  And why?  Because we're panicking and he's not.  He's picking up some bargains.

Regular readers of Deafening Silence will know (I hope!) that I'm not a conspiracy theorist.  Equating the Obama administration with a Capra-esque villain would make me uncomfortable.

But I'm equally uncomfortable with the administration's economic plans.  Or rather, I'm uncomfortable because there doesn't seem to be an actual, organized plan.  Instead we have gotten a series of disconnected gestures with no coherent explanation. Fire this executive.  Bail out that bank. Pass legislation designed to punish AIG.

And in all this time, not one person of authority has come forward, taken the microphone and explained in calm, logical terms the path the administration is persuing.  We have been left to gape and gawk and guess at their next move like it's some parlor game.

And while we are gaping and guessing, no one is bothering to ask our opinion- even as they spend our money.

Surely there is a better way to handle all of this.  Surely we can all stop, step back, take a deep breath and spend some time analyzing the situation and mapping out a clear strategy.  We're all smart enough to do that.

Until then, we're just punching shadows in the dark while the sirens go screaming by.

(Consolation Prize: Watch for the brief-but-delightful appearance of Ellen Corby at about minute 6:40, bless her heart.  I'm clutching my $17.50 too, right now.)