Accountability

Good morning.

Anyone over 50, such as myself, should remember Watergate.  The lesson learned from that should have been that this is a country governed by the rule of law, not men.  It would seem that this lesson has to be learned all over again.  This is with respect to the decision by Obama to do recess appointments even though there isn't a recess.  Congress has the power to determine if it is in recess or not.

Obama's excuse is that Republicans are deliberately sabotaging his attempts to govern. But that doesn't matter, one way or the other.  The President will have to be inconvenienced because that is the law.  If he finds the law inconvenient, then we are back to that same old issue of rule of law v. rule of men.

The rule of law won during the Watergate Era, but that is not clear this time who or what the winner may be. That ought to give pause to everyone.  We may be crossing a threshold that we should not want to cross.

It gets back to accountability.  If you won't be accountable to the law, then what are you accountable to? The accountability here should also be political, because there is an election this year.  If Obama feels that he has a political issue, then run on that. But that is what he is doing.  That is all he should do.  This disrespect for the rule of law is going too far.  Everyone has to be accountable to the law.  That includes the President, which was what we learned from Watergate.

This allows me to segue into another related thought about the MF Global situation.  Ann Barnhart did an interview in relation to the fallout of this, and I was listening to it yesterday morning.

But it got to be too much for me, so I turned it off.  I am in sympathy with a lot of what she says, but now I am seeing this a different way than she does.  She seems to think it as a reason to be pessimistic, but I see it as a positive good that CME didn't backstop the system.  What they did was to refuse to backstop corruption.

That is what was good about it.  This now encourages the system to be more accountable.  If CME did backstop the system, then there would be no incentive for the system to clean itself up.  Right now, everybody in the markets should understand that this needs to be cleaned up, or they will be the ones left holding the bag, just like the MF Global customers.  That's the kind of encouragement that can allow the system to police itself more effectively.

As accountability is a necessity to proper functioning of markets, so it is the same as with the government. That principle should hold for the rest of the society as well.  People are going to have to be accountable to the law and to morality, or we will be in a world of trouble.  That may have to get pounded into people's heads again and again until enough people accept the necessity for this.  Until that necessity is understood, things cannot improve.  If the markets and the government cannot be held to accountability, what comes in its place?

The TARP business did not allow accountability to straighten out the mess that had occurred which had brought on the crisis in the first place.  Consequently, we are still dealing with what is basically the same problem.  As long as people in high places are allowed to behave in irresponsible ways, what reason do we have to expect anything else but bigger and bigger troubles?  This permeates and corrupts the entire society. Pretty soon, you will have chaos, as people see no reason to respect order when so many others aren't.

One way or another, something must prevail.  So, what will it be?  The rule of law or the rule of men?

Order or chaos?  A democracy of free men who can rule themselves, or a dictatorship that must be governed by a strong man?

We passed the test during Watergate, but will we pass the test this time?