European Leaders Begin to Size up Obama

It seems like it has been years since Obama gave his speech in France in front of thousands of raving fans. People came in mass to stand at the feet of "the Messiah" who pointed towards a new era in international relations. Obama's polling numbers were off the chart through out Europe and leaders on the other side of the Atlantic were anxious to enter a new era with a new US leader.

We are now just a couple of months into the Obama Administration and reviews are beginning to come in from those same leaders who were very recently singing his praises.

French President Nicolas Sarkozy believes that Obama's approach of focusing on bailouts is fundamentally flawed and short sighted, declaring, "the problem is not about spending more, but putting in place a system of regulation so that the economic and financial catastrophe that the world is seeing does not reproduce itself."

The Wall Street Journal is reporting that "the prime minister of the Czech Republic slammed President Barack Obama's plan to spend nearly $2 trillion to push the U.S. economy out of recession as 'the road to hell' that European Union governments must avoid." Furthermore, "all of these steps, these combinations and permanency is the road to hell," Mr. Topolanek said. "We need to read the history books and the lessons of history and the biggest success of the [EU] is the refusal to go this way. Americans will need liquidity to finance all their measures and they will balance this with the sale of their bonds but this will undermine the liquidity of the global financial market," Mirek Topolanek said.

The Telegraph, a British newspaper recently had the headline, "Can Obama win Us Back?" It is sub titled "President Obama is losing friends - and the G20 will be a further test." The newspaper was referring to the lack of preparation the US put into its embassy positions. Clearly, for the US, international relations was on the back burner in the minds of British leaders.

Not all of the criticism is towards Obama directly, but the disagreement in approach is still obvious. Sweden was been facing a problem with its automobile industry that is very similar to what the US has faced, yet had a very different response to its problems. The New York Times reported that the "enterprise minister, Maud Olofsson, put it recently, 'The Swedish state is not prepared to own car factories.'" Saab lost over $340 million last year and has begun the process of "reorganization," which is one step short of bankruptcy.

Headlines through out Europe are generally taking a more negative, or at least, cautious tone and are increasingly doubtful about Obama's ability to move the US in the right direction. What is interesting about the criticism is that it is coming from countries that have been noted for being socialist for decades, but are now concerned that the US is taking an approach that is to the left of them. These are strange days indeed.

Kevin Price is Host of the Price of Business, the longest running show on CNN 650 (M-F at 11 am). Eric Bolling of Fox News and Fox Business says that Price’s Blog “is very influential and moves the blogosphere.” Steve Moore of the Wall Street Journal calls Price the “best business talk show host in the country.” Find out why and visit his blog at www.BizPlusBlog.com and his show site at www.PriceofBusiness.com.

Sweden, US, and Answering the Socialism Question

The economic lessons the vast majority of us received in high school and college is grossly inadequate. Most people can't answer the simple question as to whether the US is making a dramatic move towards socialism. In fact, most can't even explain what socialism is. Socialism is simply defined as "government control or ownership of the means of production." What are the means of production? You and I are, of course, as are the businesses we own and work for.

Recently and with questionable Constitutional authority, the Congress has financed (largely through fiat money) the massive taking over of numerous financial institutions. So ambitious is the government's reach, Congressional leaders are "naming names" of individuals who received bonuses from companies that garnered a bailout to an angry mob and retroactively taxing these executives in an effort to punish the businesses they claimed a commitment to protect.

Secretary of Treasury Timothy Geithner and company are not finished yet. The Associated Press are reporting that he and Federal Reserve Chairman Bernanke "sought broad new powers Tuesday to regulate tottering nonbank financial companies like insurance giant AIG, and President Barack Obama said he hopes 'it doesn't take too long to convince Congress' to grant them.'" These powers don't merely transfer to the Fed and to Treasury, but to the President himself. Furthermore "Along with the new authority to regulate and, if necessary, take over giant financial companies whose collapse might endanger the broader economy, the administration wants increased oversight and controls of previously unregulated markets such as hedge and private equity funds." The government's reach will even go into financial institutions that didn't participate in the bailout programs.

I remember when Americans were shocked back in 1979 when Chrysler successfully negotiated a bailout from the federal government that was a fraction of what GM received in January, which was a very small fraction of what the government gave in bailouts in general.

Historically, when we typically think of socialism, we think of Europe. Furthermore, the most socialistic of all the European governments is arguably Sweden, which is famous for its "cradle to grave" government programs. But recently George Bush, without Congressional approval, gave $15 billion to help bailout the Automobile industry. Sweden's government had a very different message to its struggling and iconic Saab motor company. The New York Times reported that the "enterprise minister, Maud Olofsson, put it recently, 'The Swedish state is not prepared to own car factories.'" Saab lost over $340 million last year and has begun the process of "reorganization," which is one step short of bankruptcy.

Ironically, the Washington Times has noted that "Treasury Secretary Timothy Geithner said Monday that the administration decided on its public-private plan to rescue the U.S. financial system because "we are not Sweden," the country known for nationalizing troubled banks and other sectors of its economy. We are the United States of America, we are not Sweden," Mr. Geithner said.

Geithner is right, Sweden had enough sense and, maybe a commitment to free market principles, to avoid socializing the automobile industry. One thing we know for sure is that there is no question the US is making a dramatic move towards becoming socialistic and seems to be trying to surpass, rather than merely catch up, with Europe's poster child of socialism.

Kevin Price is Host of the Price of Business, the longest running show on CNN 650 (M-F at 11 am). Eric Bolling of Fox News and Fox Business says that Price’s Blog “is very influential and moves the blogosphere.” Steve Moore of the Wall Street Journal calls Price the “best business talk show host in the country.” Find out why and visit his blog at www.BizPlusBlog.com and his show site at www.PriceofBusiness.com.