Bears, Bulls, Chickens and Pigs: wOw’s Wall Street Weekly with Liz Peek (Week of 6/8) 

Editor’s Note: Liz Peek is a financial columnist and the author of wOw’s SHEconomics.

For those who consider me a gloom-meister, take note: In spite of five days of steady rain that could plunge Pollyanna herself into despair, I have two items of good news. The first is that ten U.S. banks will start repaying $68 billion in TARP funds beginning next week. This surely suggests that most of the country’s large financial institutions have regained their footing.

Unfortunately, the banks’ eagerness to repay government funds highlights controversial strong-arm tactics that the Obama administration has used to bring corporate America to heel. The president’s team used TARP dependence to pressure the firms – some of which were forced to take TARP funds that they didn’t need – to accept unacceptable terms on the auto bankruptcies, and to push through credit card regulations, boardroom changes, pay restrictions and mortgage refinancing programs deemed in the greater good. No wonder that, once again, the Treasury’s plan for private purchases of toxic assets (PPIP) is dead on arrival. No one in their right mind wants to get in bed with this government. (This actually did start out to be a positive message!)

The second bit of cheer comes from China. What great news that the Chinese have blundered into a public censorship squabble, highlighting just what is supposed to be the difference between Communism and capitalism. Just when I was beginning to despair that the Chinese were doing everything right as we were headed in the opposite direction, they suddenly dictate that laptops sold in their country must be equipped with a device that will allow for government control over content. 

Thank heavens. Recently, the Chinese have been on a roll. Against many odds, they have weathered the global financial storm better than most. They adopted a $586 billion infrastructure-centered stimulus package last fall that actually seems to be creating jobs (while ours is saving jobs), they continue to take a farsighted and strategic view of acquiring resources the world over (while we discourage even our own resource development – coal oil, natural gas), they have slowly been privatizing and deregulating industry (while we are increasing government’s role), and they have been building up their military (while we …). In sum, they have been getting richer while we’ve been getting poorer. As a result, the Chinese can now destabilize our markets by voicing disaffection for dollars or by shunning our very necessary sales of Treasury bonds. That they own $2 trillion of such assets thankfully aligns our interests at least in the short run. But there’s no denying that such a stake gives China an undesirably big seat at the U.S. table.

The proof of their recession-fighting measures is in the pudding; despite plunging exports, long the driver of China’s economy, industrial output rose 8.9% in May, and retail sales were up 15.2%. The stimulus plan appears to be turning their economy inward and helping to create more balance – a highly desirable outcome.

With all this success comes a certain bumptiousness. A recent editorial by Singapore Professor Zheng Yongnian in The China Daily said “the developed (countries) are worried that the Chinese model could become the alternative to that of the West.” That may be true, but though we may envy China’s expected growth of 8% this year, the recent heavy-handed intrusion into what citizens may or may not receive over the Internet reminds us why we are happy to live in the U.S.

Not that everything is so peachy at home. But we do have the right to criticize our government, a right that seems especially important just now. We have a young, ambitious president who unfortunately came into office in the middle of a terrible recession. His desire to fix numerous problems is laudable; his confidence that increased government involvement and spending will loft us over most hurdles ignores our diminished pocketbook.