The Big Scary Thing

Sometimes there really is something under the bed

©Bryan Zepp Jamieson
9/21/08
http://www.mytown.ca/zepp
 

When Treasury Secretary Paulson appeared before leaders of Congress on Wednesday and told them, “[W]e’re literally maybe days away from a complete meltdown of our financial system, with all the implications here at home and globally,” Congressional leaders took note. Well, there is an old saying that goes, “Being executed at dawn has a way of focusing the attention wonderfully.”

It was the kind of language about the economy that you normally find only on websites that claim the United States (usually spelled “united States”) really died in 1913, or 1934, or maybe it was the Bank Nullification Act in 1820something. Whole country never amounted to anything after that, you know.

The last time it could be used in earnest was 1933, when FDR told everyone to stop fearing fear. (In one of those little oddities that reality always uses to trump fiction, a study came out the day Paulson was speaking to Congress asserting that conservatives were more easily frightened than liberals.) Certainly, it was nothing more than his serene confidence and the jaunty cigarette holder that prevented the nation from utter collapse over the next 100 days while Congress worked out what to do about the Great Depression.

Now, we’ve got John McCain, channeling Herbert Hoover and Robert Mellon and assuring us that business conditions are fundamentally sound. And we’ve got Putsch, stammering into the camera that the economy is really challenging, and we’re all going to have to work hard.

And Congress and the admin promise to get right on it, and use at least $700 billion to buy up all the bad mortgages and save the entire banking system.

Based on that, the banksters all gave a loud whoop and a holler, and the Dow jumped 870 points in two days. I didn’t actually SEE CEO’s out on Wall Street doing a Rockettes gig while singing “Happy Days Are Here Again!” but I could easily imagine it.

According to the hysterically relieved movers and shakers, we’ve just had our “We Have Nothing to Fear” moment, the instant of deepest crisis has passed, and we can start putting everything back to where it was a year ago.

The problem is that when that moment arrived in 1933, it came with a brand new president, a brand new Congress, and a resolve to have a series of vast reforms in place in the next 100 days. Had it become apparent that nothing was going to happen two weeks after FDR’s inaugural address, then he would have been known as America’s final (and briefest) president, and his speech, if it was remembered at all, would go down along side those of the mogul who thought television was a dumb idea, or that men would never go to the moon.

The problem here is that of timing. We don’t have a fresh new president. Instead, we have the lamest of lame ducks, a man who, on the best day he ever had, was immensely incompetent and viciously dishonest. We don’t have a resolute new Congress, ready to roll up its sleeves and save the nation. Instead, we have the least popular congress in polling history, and they want to do nothing more than roll up their sleeves and go home and campaign, telling the folks they’re taking care of business and so they ought to be re-elected.

If Obama hasn’t taken a very assertive stance, at least he managed to avoid making a complete fool of himself the way McCain did when he described the economy as “strong” even as the markets panicked and the U.S. Secretary of the Treasury was warning Congressional leaders that the whole thing was about to collapse. That got him some well-deserved mocking, and he promptly dropped eight points in the polls. Even worse, he had an article appear in Contingencies, the magazine for American Actuaries, which included the following most unfortunate passage: “Opening up the health insurance market to more vigorous nationwide competition, as we have done over the last decade in banking, would provide more choices of innovative products less burdened by the worst excesses of state-based regulation.” In fairness, he had to have written that at least four months earlier, but it’s a bit like going to a venture capitalist with a business model based on Enron’s two days after it goes bankrupt. Even Herbert Hoover at his darkest moments avoided that kind of bad luck.

This isn’t March 1933; this is more like November, 1932, when things were beginning to really disintegrate in earnest, and the president, while brighter and better intentioned then the present incumbent, could only flutter his hands helplessly and take bad advice from his cabinet, who believed that tight credit and laissez faire economics – the main things that got America into that mess – would surely get it out of that mess. The Congress was much like the Congress we have today, filled with complacent old hacks with a sense of entitlement and a willingness to please the people who funded them first and their constituents later, if there was time.

So the huge boom is the same type of unreasoning hysteria and fear that drove the crashes earlier in the month. It’s the hysterical relief of the three year old clinging to a parent’s leg. Don’t trust it.

It’s possible that, in the space of a few days, Congress and the admin can come up with a bail-out plan that isn’t so patently absurd that Wall Street can at least pretend it’s a life buoy. Chances are it will cost us at least a trillion dollars (about $3,000 per person in the US) and for Wall Street to buy it, it probably won’t contain any real reform. We’ll just be in the position of covering the gambling losses of rich men so they don’t leave the table. Keep in mind, two, that the Putsch Junta has a long and inglorious history of opportunistic “disaster capitalism”, turning 9/11, the Iraq occupation and Katrina into money-making opportunities for their buddies. Why should they treat this any differently?

Left unmentioned is whether the plan will just protect the banksters that made the bad loans, or do something for the people who got suckered into taking out those loans and stand to lose their houses. There’s a good chance the people won’t be helped, since Wall Street still hasn’t figured out that in a consumer economy, you need consumers who aren’t destitute.

The GOP is in denial, too. Drudge tore a factoid off the GOP fax machine and posted the chipper, happy news : ‘DOW ENDS WEEK DOWN 34 POINTS; DOW UP 40 POINTS IN PAST MONTH... UP 18% PAST 5 YEARS... UP 44% PAST 10 YEARS...” All of which is true, of course, but doesn’t describe a patient so healthy that it’s now safe to vote for the GOP again. (The subtext in all that was interesting, to say the least).

There’s already a lot of public fury over the ongoing bailouts, now racing toward the two trillion mark. At 3% interest, that’s an extra twenty billion a year on the annual deficit, in addition to the vast amounts of Republican debt (10% of which came from the last huge bailout of banksters, the RTC in the wake of the savings-and-loan fiasco). People aren’t interested in covering the losses of people who turn around, sneer, cheat them again, and then use the profits to buy out government and the courts to feather their own nests even more.

There’s a technical term for the tipping point on that situation: it’s called a revolution. And those cost even more than bailouts of greedy, stupid, thieving Wall Street plutocrats.

For now, an economic crash, while not inevitable, has not been forestalled, and given the inability of the present government, we’ll have to wait a good five months for anything concrete to happen, let alone anything that might help us rather than hurt us. Whether the incredibly corrupt capitalists’ system that the GOP has brought on America can last that long is problematical.

So don’t relax just yet. Just because the government has admitted there’s a big scary thing under your bed doesn’t mean they know how to make it go away. Or that they even want to.