Blink and you may miss another government bail-out, loan guarantee, federal plan to alleviate a bad or unwise mortgage, a suggestion for more government funds for a more aggrieved constituency, or credit-card relief proposal, etc.
All this is said to be smart and necessary, given that we are told that the problem right now is an absence of liquidity. As I understand it, we wish to borrow or print trillions more in money to prime the system and get people active and at work again. That is altogether good and noble, inasmuch as our problems are driven by panic and now psychosocial as much as material (after all, we have not experienced a massive earthquake, plague or foreign attack that destroyed people and things.) But a few cautionary worries:
Unemployment is still below 7%. Inflation is low. So are interest rates. GDP did not go negative by much in the last quarter. The point is that we are not yet in an era of 1929-39 by any means.
There are enormous natural stimuli underway: in 2009 over a trillion dollars in national fuel savings will occur if energy prices stay below $50 a barrel. Indeed, they may drop even further, given slack world demand and enormous efforts at new discoveries the last five years. The price of housing is approaching, or indeed in some places below, the actual cost of replacement; so we may see millions of first-time buyers find their initial homes affordable in a way that had not been true in a quarter-century.
Have we made failure obsolete? Almost every bank, company, or financial house blames their troubles on “them”. Defaulters blame “them.” Politicians blame “them.” Who exactly is this “them”?
No one took out an unwise mortgage, paid too much for a house, had too little capital to be buying a home, or invested his company’s assets in unwise portfolios? To suggest there is no culpability is to suggest likewise there is no prudence, no wisdom—that there were no Americans who chose to rent until they could pay a suitable sum as a down payment, or bought homes smaller than they wished and more in attuned with their budgets, or corporations who simply thought bundled subprime mortgages were a bad idea.
I have little capital, but still wonder if having any is becoming problematic. If one can’t get much interest on savings, if real estate goes south, if stocks are iffy, if bonds hardly pay—while debt is forgiven—then it seems wiser to incur debt than savings? And what is the moral lesson of that? (Keep moving and ensure an active income and never retire?). This all reminds me of the agenda of a typical Catilinarian of first-century B.C Rome (“redistribution of property” and “cancellation of debts”).
Don’t Tread on Me?
Much was written about the folk hero status accorded the Iraqi journalist who threw two shoes at President Bush. The Arab Street and the American Left point to the incident as proof of the real feelings of the Middle East toward Bush the colonialist; his supporters countering that only in a free Iraq would he dare do such a thing—impossible presently in any other Arab country. My only take is that it shows very little courage. Real courage would have been to throw shoes at Saddam; or even to return to Cairo and throw something at a Mubarak during a public event. That would take singular courage and establish the integrity of the journalist as a consistent critic of authoritarianism—and might additionally earn you a noose rather than accolades on Arab websites.
I was amused as the next person about the Big Three flying in corporate jets for their mini-trips to Washington. That said, I was equally amused that Speaker Pelosi flies in an amply-sized jet herself, and many of the nation’s governors as well fly in state-owned private craft. Of course, we all think that Goldman Sachs, Lehman Brothers, AIG, and the rest were terribly managed. That said, the inquisitors in the Senate and House were themselves a sorry bunch. The Congress has in aggregate run up thirteen trillion dollars in debt. Barney Frank and Chris Dodd as overseers of Freddie/Fannie proved to be instead enablers under the cloak of political-correctness and generous campaign donations.
Rep. Charles Rangel, who oversees Ways and Means, was no overseer himself, but hip-deep in corruption. Had he not continually played politically-correct cards, he would now be facing a Ted Stevens-like bad hand.
The point of all this? That the luminaries in Congress that are taking over much of the financial, banking, and auto industries are themselves either incompetents or suspect or both. What could ruin the U.S. is a sort of EU self-righteous government octopus that talks grandly of democracy and fairness while it attempts to squeeze the individual and thrugh social pressures censor any free expression deemed politically-incorrect. I don’t think we want our major corporations and banks run by the mentality that gave us Freddie, the DC Post Office, the actuarial logic of the Social Security system, or the Illinois state machine. By all means regulate Wall Street greed. Redo Fannie and Freddie. Create a moral climate in the US that means a Richard Fuld is the object of scorn rather than adulation. But please do not imagine that a Frank, Pelosi, or Dodd know much of anything how to manage government entwined businesses.
As bad as the condition that confronts the US, we are better off than most others. The EU owes $5 trillion in debt abroad, most of it uncollectible. Its members are at each other’s throats; higher unemployment and static demographics ensure there is not to be likely as much resilience and rebound as here in the US.
Russia, Venezuela, and Iran—as one-trick-pony oil exporters—are going broke and lowering their global mischievous profile. China is paranoid that its exports are ossifying when they must grow at 10% per annum if millions of new workers are to be incorporated into the work force. China has a multi-trillion-dollar rendezvous with unionization, environmentalism, suburban blues, and massive inputs in infrastructure.
Rather than look simply at our own dismal fiscal stats, instead, ask more germane philosophical questions: which country is more likely to remain politically stable during the global upheaval? Who encourages advancement more through meritocracy rather than nepotism or class and tribal affiliations? What nation will be the least likely to sink into work stoppages, religious and racial sectarianism, and violence? What country does foreign capital seek out to ensure safety in these unsettled times? Where are new ideas and products meeting the lesser resistance and accorded the greater compensation?
I think, in fairness, the US stands alone in most of the above categories that ultimately translate into superior economic growth. What we are seeing is a sort of global chemotherapy almost spontaneously occurring to destroy the cancer of speculation, fraud, huge borrowing, and creative accounting and to restore trust into the system. This naturally toxic medicine of deflation, doubt, timidity, and regulation may destroy some hosts, even as it takes out the cancer that started on September 14. Yet the US is in the best position to survive the toxicity and emerge on the other side of the treatment in remission and healthy.
The Mysterious Gen. Powell—Part II
As I wrote earlier I remain baffled by Colin Powell, whom I have always liked and respected. But consider: he said that he was still a (a) conservative, but (b) voted for the most liberal candidate for the presidency since George McGovern. Fine….
(c) But he gave no policy reasons at all why Obama’s platform was more akin to his own than McCain’s. Why, then, the political change?
(d) Oh, he insisted his choice had nothing to do with racial fides or solidarity, but almost immediately following the election, offered a sermon on reaching out to minority groups; in the case of Obama’s majority win, however, 90% of the African-American community voted along racial lines, in a way whites did not for McCain. George Bush made more high-level minority appointments than did Bill Clinton. Sec. of State, National Security Advisor, Attorney General—these posts were all staffed in the Bush administration by African-Americans or Hispanics. George Bush gave far more in AIDs relief to black Africa than did Bill Clinton. On the diversity issue Bush vs Clinton is at best a draw for Clinton.
(e) He suggested that conservatives were insensitive to the needs of gays and minorities, but in 1993 Powell had led the military’s resistance to gays in the military as envisioned by the Clinton administration. (re: Powell’s worry over diversity: Sarah Palin was the first woman to be nominated as VP on a Republican ticket.)
(f) He offered Olympian instruction about morality and the need for conservatives to turn off Limbaugh and construct a new more diverse ethos, but testified (in vain) in court under oath about the sterling character of the now felonious Sen. Ted Stevens, a reprehensible politician of the old boy network if there ever were one. He criticized Sarah Palin as a sort of conservative dinosaur, but she took on the business as usual climate in Alaska (cf. again, Powell’s encomium concerning the Alaskan Stevens) as Powell did not in Washington. During the Kafkaesque Libby trial, at some point Powell must have known that his own trusted subordinate, Richard Armitage, had first disclosed the supposed CIA affiliations of Valerie Plame, and then remained unconscionably silent as Scooter Libby was convicted of obstruction of justice originating from a false charge that he had first disclosed Plame’s covert persona—that was, as we now know, never really covert.
(g) Powell advised ending the first Gulf War prematurely, ensuring both the survival of Saddam and the slaughtering of the Shiite uprising. His testimony before the UN about WMD in Iraq proved flawed, but flawed in my view also because he failed, as Sec. of State, to remind the world that the US Congress had voted for 23 writs for war, and that most of these casus belli were of prior interest to the UN and absolutely unimpeachable—ranging from Saddam’s genocide to violations of UN and 1991 armistice accords. The point here is merely that in the past his own decisions have been as difficult and controversial as those whom he now finds such easy fault in.
(h) Powell’s statements are inconsistent at best, nonsense at worst: he now deplores the right-wing of the Republican Party. Fine, but Ronald Reagan, its apotheosis, promoted him (his break came in 1987 when Reagan named him National Security Advisor in his late 40s). Given his emphasis on diversity and inclusiveness, he could have much more easily disparaged Reaganite conservatism on the same basis that he is now writing off the party of McCain. His ideal apparently was McCain centrism, which was far to the left of either his past two employers, Reagan or Bush I (compare the very tough anti-liberal and polarizing 1988 campaign). But now given the centrist McCain candidacy (comprehensive immigration reform, no to ANWR, yes to man-induced global warming, etc.) Powell suddenly for the first time in his career endorses a Democrat. (The time to do that would have been 1980, 1984, 1988 or 2000). It simply doesn’t compute; and when one figures in the timing of the endorsement (post-September 14 meltdown as the economy and McCain’s candidacy went southward), expediency looms large despite the pretext of principled criticism. Footnote on racial polarization: McCain went out of his way to forbid Rev. Wright campaign ads; Obama only disowned the Rev. after his National Press Club antics and after his prior infamous “I could no more disown…”, despite the substantial record of racial hatred shown by Wright against whites, Jews, Italian ethnics, etc.
All in all—simply stunning!