ECONOMIC WARNING – AT 7:49 A.M. ET:  The administration keeps telling us the economy is improving.  I'd like to see some hard evidence.  Meanwhile, a bipartisan group of economists is warning about another economic shock.  From what's left of ABC News:

Even as many Americans still struggle to recover from the country's worst economic downturn since the Great Depression, another crisis – one that will be even worse than the current one – is looming, according to a new report from a group of leading economists, financiers, and former federal regulators.

In the report, the panel, that includes Rob Johnson of the United Nations Commission of Experts on Finance and bailout watchdog Elizabeth Warren, warns that financial regulatory reform measures proposed by the Obama administration and Congress must be beefed up to prevent banks from continuing to engage in high risk investing that precipitated the near collapse of the U.S. economy in 2008.

The report warns that the country is now immersed in a "doomsday cycle" wherein banks use borrowed money to take massive risks in an attempt to pay big dividends to shareholders and big bonuses to management – and when the risks go wrong, the banks receive taxpayer bailouts from the government.

"Risk-taking at banks," the report cautions, "will soon be larger than ever."

COMMENT:  The Constitution tasks Congress with regulating interstate commerce.  Both parties agree that further regulation is needed, but they disagree on the form.  We have, by the way, received a number of warnings like the one above. 

It is true that Wall Street seems to be reverting to its old tricks.  We don't much like government intervention in the economy, but the Constitutional mandate must be carried out.  Clearly, there are powerful financial institutions whose irresponsibility contributed to the meltdown of 2008.  If carefully crafted regulation is required to prevent another obscenity, we'll have to pass it. 

This is one of those situations where a part of the enterprise system, often aided and abetted by reckless government-sponsored entitites like Fannie and Freddie, has failed the nation.  And once again they give the enemies of free enterprise all the ammunition they need.

March 3, 2010