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As Long as We Remember...

April 8, 2009

Thanks, but no thanks

Kevin E. Dayhoff

An opinion piece appeared in The Wall Street Journal last Sunday, relatively unnoticed except by economics geeks, citing the growing trend among banks that accepted Troubled Asset Relief Program –TARP – money who are begging the government to take the money back.


It was written by Stuart Varney, who began by saying: “I must be naive. I really thought the administration would welcome the return of bank bailout money.”


Fascinating! Have you heard that the banks are giving the money back? Wouldn’t you think this would be something that the Obama Administration would want everyone to know?


According to Mr. Varney, “some $340 million in TARP cash flowed back this week from four small banks in Louisiana, New York, Indiana and California. This isn't much when we routinely talk in trillions, but clearly that money has not been wasted or otherwise sunk down Wall Street's black hole. So why no cheering as the cash comes back?”


In another concurrent facet of the controversy over the federal “bailout” strategy, a little over a month before Mr. Varney’s piece, political economist Robert Higgs stated quite correctly in The Christian Science Monitor in a February 9 piece, entitled, “Instead of stimulus, do nothing – seriously,” that “…history shows that the economy can recover strongly on its own, if politicians stay out of the way.”


Instead of staying out of the way, incredulously, not only is the Obama Administration bankrupting our country with its economic stimulus plan, it is now making it quite difficult for the banks to give the money back.


Yes, you read that correctly. Actually what is really happening, according to number of relatively unnoticed news accounts; is that the Obama Administration is essentially forcing banks to keep the TARP money.


Why? Mr. Varney, who may end-up in a re-education camp before I do, dared to say: “My answer: The government wants to control the banks, just as it now controls GM and Chrysler, and will surely control the health industry in the not-too-distant future. Keeping them TARP-stuffed is the key to control.”


This is yet another example of the Obama Administration’s insidious emphasis on unprecedented federal intrusion into private enterprise and the disturbing trend, on the part of the government, to command and control the principle means of production in our country.


Several other concurrent dynamics are in play with this latest development, above and beyond the matter that the Keynesian economic stimulus, as begun under the Bush Administration and embraced and expanded-upon by the Obama Administration, is counter-productive to getting the economy back on track.


Of course let’s not overlook that there are those who agree with Dr. Robert Higgs, a senior fellow in political economy for The Independent Institute and editor of the Institute’s quarterly journal The Independent Review, who has called to our attention that our Constitution should serve as a major constraint on federal economic interventionism.


Perhaps one of the first news accounts reflecting that banks want to give the money back was reported by Ralph Vartabedian in an article in the Los Angeles Times on March 14, “Banks scramble to return bailout funds.”


At that time, Mr. Vartabedian wrote: “A growing number of healthy bank chains across the country are bailing out of the $700-billion federal banking bailout program, saying it has tarnished the reputation of banks that took the money and tangled them in unwieldy regulations.”


And it is not as much that the government money has “tangled them in unwieldy regulations,” but the rules keep changing retroactively as each day passes; and Congress put its finger to the wind and manically addresses the outrage of the day.


Of course, what Congress is really doing is a desperate attempt to keep the public from determining that it was Congress that started the mess in the first place. But it is Congress that makes the economic crisis worse every time it tries to cover its tracks.


The constantly changing rules are also fueling the perpetuation of the economic challenge to our nation. It was Dr. Higgs who developed the thesis “regime uncertainty” in the course of his study into the New Deal as a cause of the Great Depression.


An oversimplification of “regime uncertainty” reveals that the constantly changing nature of federal intrusion into the private sector economy, out-of-control class warfare rhetoric and the overwhelming distrust of the government thwarted business spending and investment, and economic recovery in the 1930s. Sound familiar?


For example, Dr. Higgs has written that in “the 1930s, (the) federal courts issued some 1,600 injunctions to restrain officials from carrying out acts of Congress, and the Supreme Court overturned the New Deal's centerpieces, the National Industrial Recovery Act and the Agricultural Adjustment Act, and other statutes…”


In order to maintain an air of crisis so that the Obama Administration and an enabling Congress may further the cause of Big Brother government, a steady drumbeat has emanated from Washington that it is really the rich, the banks and big corporations that are the villain in this mess; and it is Washington’s job to punish them.


Gee, to think that, if anything, big government should be trying to make life better for the citizens it serves, not stage a coup d’etat.


However, remember that the rallying cry of the Obama Administration is, according to White House Chief of Staff Rahm Emanuel, “you never want a serious crisis to go to waste. … It's an opportunity to do things that you think you could not do before.”


One of the cruelest hoaxes of our time is the idea that the government is here to help – when actually, more often than not, the government is the problem.


A big first step to overcoming our economic malaise would be for all the banks who received TARP money – to return it and say “Thanks, but no thanks.”


Kevin Dayhoff writes from Westminster. E-mail him at


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