Steve Forbes Criticizes Obama for Repeating Bush’s Mistakes

Categories: Politics & Economics

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Jason Staples Substack

In an interesting Op-Ed in the Wall Street Journal, former Republican presidential candidate Steve Forbes (remember him? he was the flat tax guy) complains about Obama’s economic policies. While that’s entirely unsurprising, the interesting part is that he criticizes Obama for upholding critical changes to FDR policies made by George Bush, namely:
1) The reintroduction of “mark-to-market” bookkeeping (notably practiced by Enron) in the financial sector and

2) The elimination of rules governing “short selling” (a practice essentially involving borrowing shares of a stock and promptly selling them at the present — overvalued — price, only to buy them at the lower price after they have dropped and then returning them to the owner, making short-selling an effective way to make money in a downturn). Previously (since 1938), a stock would have had to increase before it decreased in order for a short-sale to be legal (thus preventing large-scale short-selling from rapidly driving stock prices down), but this prohibition was eliminated under Bush.

Forbes argues that the combination of these two factors has substantially exacerbated the volatility of the stock markets and will continue to have negative effects. Whether he’s right or wrong, it’s interesting to see a conservative economic thinker (Forbes) criticize a Republican (Bush) and a Democrat (Obama) for not upholding changes put in place by FDR.

Tags: Economics, Politics & Economics

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