By summer 2008, most financial gurus concluded that the economic bubble that spanned most of the Clinton and Bush administrations was about to burst. Political panic seized the Bush administration, “the sky’s falling and America is doomed” unless the government steps in with new regulations, institutional takeovers and massive lending. Even before inauguration, Barack Obama notched up the fear, “If we don’t act swiftly, the economic decline might be irreversible.” We soon saw that Bush and Obama were two shoes of the same clown. Their massive expenditures didn’t help the economy but in truth were bailout for their elite friends on Wall Street.

But the question no one was asking was the banking system really in crisis or was it simply a case of mismanagement? Why not let them fail? Conceptionally, Washington assumes banking is the linchpin of American economy and bankruptcy was not an option. Enron was the largest energy company in the United States. Its bankruptcy in 2001 had no effect on the economy at all, and even energy markets barely noticed it.

Economist Steven Landsburg asks, “What’s so special about banks” that makes them deserve a bailout that would never be granted to firms in other industries. The usual argument was that otherwise lending would come to a halt; business would not be able to raise needed funds, and so on. But banks are merely intermediaries between depositors and borrowers. Before the age of the big Wall Street banks, it was far easier for would-be lenders and borrowers to find each other outside the banking system. Landsburg goes on, “I’m not sure these big Wall Street banks are really necessary, and I’m not sure we would miss them much if they were gone.”

Indeed Obama inherited the banking fiasco, but the so-called auto industry crisis is another matter. He owns it outright. Long gone are the days when Henry Ford famously said Americans could have any color car they wanted, as long as it was black. Innovative, vibrant American manufactures raced to a world leadership position which was not challenged for half a century. Today, American streets are littered with cars in every color of the rainbow, far more streamlined and powerful. Even four-cylinder engines exceed the horsepower of the old eight-cylinder engines. So why has American free-market auto manufacturing failed?

The answer is that it is not at all clear that it has. American auto manufacturing has been subject to an ever-tightening noose of government regulations. And by the time union “legacy” labor cost is piled on the cost of each vehicle, American cars are just not profitable. Chrysler and General Motors need to shed their costly union contracts by going through bankruptcy — a real one, not Obama’s phony one with union contracts declared off limits from the start.

But the Obama administration, deeply beholden to the unions, wanted no part of an orderly economic solution. Obama fired long-time GM CEO Rick Wagoner and gave Chrysler just 30 days to merge with Fiat Motors. Without Constitutional authority, Congressional or public debate, Obama engineered a “surgical bankruptcy” which made the government and the UAW the major stakeholders and, in violation of bankruptcy laws, moved bond holders to the end of the line, sharing the spoils of the bankruptcy. This was pure political payback. His vilification and name-calling of honest bond holders, backers of many of America’s retirement and pension funds, clearly demonstrated Obama’s extreme hatred of capitalism.

It takes one breath away. An elected politician who never even finished a term in the Senate, who has never so much as run a local car dealership or worked the counter in a brake and muffler shop, has just removed the head of a major corporation — the kind that’s supposedly controlled by private stockholders — and now he decides American brand of cars, whether America wants to buy them or not.

The car deal tells us a lot about the Obama political wizardry which media pundits have not yet been wise enough to unravel. Many of his critics have accused him of being a socialist, but they err philosophically. According to standard jargon, socialism is where the government takes over the means of production. But the Obama system is different. His dictatorial takeover of the auto industry was tried in Italy in the 1920s. The Mussolini system was called “Fascism.”

Under the Obama “new” system, Like the Mussolini system, the private sector is kept intact but with close, monopoly supervision by the government. The pattern is repeated: banking, auto, healthcare, etc. A government hobbled private sector gives the public the illusion of capitalism which serves as the ever fall guy. When it fails, as inevitably it will, government is given the excuse for ratcheting up its power even more. Remember how Obama repeatedly insists his healthcare system is not government run. Sure!