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The Race to Captain a Sinking Ship

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Posted on Mar 18, 2008

By Eugene Robinson

    WASHINGTON—The Democratic presidential candidates squabble over real or imagined racial sensitivities, the Republican presidential candidate stages photo opportunities with the troops in Iraq, and meanwhile the financial system is coming apart at the seams.

    Would someone please tell Barack Obama, Hillary Clinton and John McCain that here in the real world, we have what looks like a real problem. It would be nice if they’d pay attention and maybe, you know, come up with some ideas for getting out of this mess.

    You’d think that when former Federal Reserve Chairman Alan Greenspan predicts that the deepening financial crisis will be “judged in retrospect as the most wrenching since the end of the Second World War,” the candidates might take note—if only in self-interest. How are Obama and Clinton going to pay for universal health insurance if billions of dollars keep evaporating in this overheated “crisis of confidence”? How does McCain intend to fund his Hundred Years’ War in the Middle East if Wall Street is in ruins and the economy is slogging through a deep recession?

    To be fair, the presidential contenders haven’t been entirely silent. Clinton, for example, did speak on the financial crisis Monday, criticizing George W. Bush for not being presidential enough in his leadership and saying she would have begun more intensive oversight of Wall Street a year ago. But that’s not the same as charting a path out of this mess.

    Bush, at least, is finally engaged in the crisis. Sort of. “We’ve taken strong and decisive action,” he said Monday. “We obviously will continue to monitor the situation. ... In the long run our economy is going to be fine. Right now we’re dealing with a difficult situation.”

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    “Difficult situation” is an incredible understatement, given that the Fed is employing gambits it hasn’t used since the Great Depression to prevent a domino-effect collapse of big Wall Street firms.

    The weekend bailout of investment bank Bear Stearns—and that’s what it was, really, a bailout wrapped inside a sale—was probably a diving catch that had to be made. This is how bad the crisis has gotten: In January 2007, Bear Stearns had a market value of $20 billion. Now, the company has been sold lock, stock and barrel to J.P. Morgan Chase for just $236 million—but only after the Fed essentially guaranteed up to $30 billion of Bear Stearns’ dodgy mortgage investments.

    There went the fifth-largest investment bank in the country. Poof.

    Meanwhile, the mortgage crisis continues unabated. I suppose we shouldn’t be surprised that when millionaire Wall Street professionals get in trouble after making investments they didn’t really understand, they get saved from bankruptcy at the last minute—whereas first-time homebuyers who get in trouble after signing mortgage documents they didn’t really understand are left to fend for themselves.

    The dollar has become so weak that it’s worth less than the Swiss franc. Oil has passed $100 a barrel. Investors are turning to gold, which now costs more than $1,000 an ounce. With food and energy prices rising sharply, home equity shrinking and the economy apparently sliding into recession, consumers are caught in a vise.

    Barring some sort of miraculous turnaround, the next president’s ability to pursue any kind of agenda is likely to be constrained by the economy. And what about those vying to be sworn in as president next January? McCain’s admission that “the issue of economics is not something I’ve understood as well as I should” casts a very different light on the whole issue of experience, doesn’t it? McCain added that he is reading Greenspan’s book. Maybe he should try spending a night in a Holiday Inn Express for good measure.

    There’s every reason to believe that Clinton and Obama, given their wonkiness, do understand economics better than McCain. Now would be a great time to display that wisdom. A good start would be to acknowledge that putting the economy back on a sound footing is likely to be the new president’s first task—and then to begin laying out some ideas for how that might be done. A little honesty would be preferable, too—an admission that no president will be able to turn around the economy overnight.

    I realize that’s heresy. Presidential candidates like to tell us about all the largesse they’re going to provide. They like to invite voters to envision the sunshine of happy days, not the gloom of an economic slump. But real leadership involves dealing with the economy as it is, rather than as we would like it to be.
   
Eugene Robinson’s e-mail address is eugenerobinson(at)washpost.com.

    © 2008, Washington Post Writers Group


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By Maani, March 19, 2008 at 8:13 am Link to this comment

Jim:

“We have lived for decades now with a lending system that functions like the mafia.”

Actually, you are more right than you know.

Just before his deportation to Italy, Lucky Luciano was invited to tour the New York Stock Exchange. When the operations manager explained how it all worked, Luciano famously said, “Holy cow!  This is the best racket in the world!  And it’s legal! If I had known about this, I would have stayed legit!”

That just about says it all, no?

Peace.

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By cyrena, March 19, 2008 at 7:23 am Link to this comment

Gomers…

There was a time when Snopes.com was of some value in confirming or NOT, various urban legends or other ‘tales of the Internet.” But, that’s all.

And, now, they are NOT the source from which to gather such important statistics, and just put them out there.
Actually, it’s just a site for the middle to older generation, who was hit head on with an on-onslaught of internet bullshit back in the early days of it, that we were most likely to believe, the same way that we generally used to believe most of what we heard on the news, or read in the newspaper. Back when those standards were much higher.

So, Snopes was established, for those who weren’t smart enough to spot a falsehood or piece of propaganda on their own, and recognize it as such. To that end, it has been helpful.

However, to think that you could go to Snopes.com, to verity something as important and complex as the costs of ANYTHING, is foolish.

People do in-depth studies and reports to find and confirm this sort of information, TO THE DEGREE THAT IT CAN BE! (This administration makes that EXTREMELY difficult, because they keep everything so secret).

So think to yourself when you read or hear statistics like ‘illegals’ cost 3 billion a year. If that is true, HOW? How is this much money spent in reference to ‘illegals’?

You apparently work at a hospital, or something similar. How many ‘illegals’ as opposed to poor American citizens of all races and/or ethnic groups are treated at your facility, at a cost to the taxpayers?

It’s the same with basic welfare payments, which I HAVE actually done the break down on. PROPORTIONATELY, (and this depends of course on the area of the country) MORE welfare and similar benefits are distributed to poor whites than all of the others combined, INCLUDING ‘illegals’.

That’s just the way it is Gomers. I remember years and years ago, a person (immigrant) could come here from ANY country, (it wasn’t just Mexicans coming in, and it STILL isn’t by the way) and they could receive welfare assistance. It used to annoy some struggling tax paying citizens, though for the most part, people society as a whole fared better back then, and employed people were still far better off than those on welfare, regardless of their residential status.

Well, NOT anymore. Any alleged ‘illegals’ here in California (and that means anyone of color without documentation of US citizenship) is NOT entitled to a damn thing. They CANNOT..(and I should repeat that for clarity…CANNOT) receive benefits from the state or the federal government.

So, if you wanna make a claim that 3 billion a year is spent on ‘illegals’ you need to back it up and break it down.

I know in MY old career, there was a WASTE of taxpayer funds every time the feds DEPORTED a non-citizen via airplane. It would require airspace for 1 deportee, and at least 1, but usually 2 INS flunkies to escort the person. Then of course the INS flunkies would have to be flown back. Now..THAT’S a waste of the taxpayers money.

Still, I don’t know that it amounts to 3 billion a year.

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By Expat, March 19, 2008 at 6:15 am Link to this comment

^ I would love to know what you did in the Soviet Union.  Any chance you could PM me on that?

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By messianicdruid, March 18, 2008 at 8:13 pm Link to this comment
(Unregistered commenter)

You have {he hasn’t quit} a candidate that understood more about economics than the entire Fed IRS PPT combined, but you didn’t want to hear it. He has been warning the governemnet and anybody that could hear for thirty years, and they didn’t want to hear it. Now you are going to start complaining about no candidates dealing withe the economic problems, I DON"T WANT TO HEAR IT!!!

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By hippy pam, March 18, 2008 at 2:00 pm Link to this comment

And McCain Wants to STAY IN IRAQ-After his Imperial HighAss Emperor Bullsh*t has BANKRUPTED THE ECONOMY and THE TREASURY-SENT ALL JOBS OVERSEAS-VETOED HEALTHCARE-MURDERED nearly 5000 AMERICANS and who knows how many IRAQUIS-I know I’m not alone when I say that amount of money could have REALLY GONE TO BETTER USE IN THIS COUNTRY…...Let us remember….BUSH*T needs to be tried for WAR CRIMES and MURDER[he ain’t no different than SADDAM HUSSEIN]

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By DennisD, March 18, 2008 at 1:28 pm Link to this comment
(Unregistered commenter)

The economy and wars are the burning bag of sh*t that Bu$h and his Neocon locusts have left on the doorstep of every American citizen to deal with as they get ready to run away smirking in Jan 09.

Let’s not forget Congress - it’s been a true bi-partisan effort. Newsbreak - The war of terrorism is over - they’ve won.

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By dick, March 18, 2008 at 11:56 am Link to this comment
(Unregistered commenter)

Not to worry. The power elite are protected, and rewarded. The masses, as usual, do not have any influence, but will pay for everything..

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By cyrena, March 18, 2008 at 9:56 am Link to this comment

You got that right Dr. Knowitall,

My ass as well.

And, in what we’ve come to expect from the cheerleader to all female politicians, we carefully note the praise to Ms. Pelosi’s efforts in supposedly doing the right or ‘ethical’ thing, whether anybody ‘wants to or not’.

Marie writes:

•  “But vociferous demands from the new members who won their seats on ethics platforms—and must defend them in November—were coupled with Pelosi’s sheer will: “You’re going to do this, whether you like it or not,” she told members behind closed doors, according to a staffer.”

Pelosi has used similar tactics of her sheer will, to lambast other members such as John Murtha, when they’ve attempted to create or pass any legislation that might be less than politically expedient, based on Ms. Pelosi’s idea of what that is. According to Rep. Murtha, she pretty much whipped him up like he had 4 legs and a tail (behind closed doors of course) when he attempted to attack conditions to funding of the ‘surge’. Then of course we know her defacto title is “Less-than-Honorable Impeachment-off-the-table Pelosi”.

So it would appear that ‘ethics’ are now important in reference to at least ACKNOWLEDGMENT of the major money thieves in the congress, but the ‘ethics’ involved in just DOING ONES JOB, as they are described in the Constitution, must not fall within the parameters of ‘ethics’.

For Mrs. Pelosi, ethics are only part of political expediency, and Boehner is a joke as well. What a continuing disaster this Congress is, as evidenced by the fact that Ms. Pelosi is unable to influence any one, (even on her OWN side of the aisle) no matter how much she beats up on them. Seems like she’d at least try to do something about all of those blue dog dems that continue to undermine the efforts of the tiny majority.

Ethics my ass.


Actually Eugene, on this…

•  “Presidential candidates like to tell us about all the largesse they’re going to provide. They like to invite voters to envision the sunshine of happy days, not the gloom of an economic slump. But real leadership involves dealing with the economy as it is, rather than as we would like it to be.”…

Hillary wasn’t the ONLY candidate to make a statement, although her’s was certainly more politically cautious and expedient. Obama was more theatrical I guess, since he began with, “”The economy is in SHAMBLES!”

Now that was yesterday, or maybe even the day before, but he’s said it before, on several occasions. Now that’s not to say that he’s laid out any specific plan for addressing it, at least none that I’ve read or heard myself. But, contrary to the implications here, he has DEFINITELY acknowledged the reality of this, on multiple occasions.

So, let’s give credit where it’s due. Being AWARE, and yes…honest about saying this stuff, is worth something in a political candidate. We sure haven’t had anything close to THAT in at least a decade.

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By Jim Yell, March 18, 2008 at 6:19 am Link to this comment
(Unregistered commenter)

We have lived for decades now with a lending system that functions like the mafia. A business investment process that takes speculated money and borrows on the speculation to create money instantly, but somewhere down the road all of this speculation is going to be un-real hype. What has been going on thanks to Republicans and enabling Democratic functionaries is what used to be called usury is business sense. It used to get its perpetrators into jail.

There needs to be rules and there used to be. There was a responsibility to lending, but thanks to outrageous interest rates for too long the lenders have been lazy and intoxicated with easy and high profits. To pay these bills consumers need income and not from instant cash. Salaries have shrunk much more than “cost of living indexes” show.

The mess that Reagan made of the Savings and Loan industry by pushing for fewer regs, should have stopped the process, but as the government bailed out the rich then, the rich used their wealth to free themselves from regulation controls and from responsibility to pay taxes to keep the system going, or even to keep work in the country, instead of fluffying their profits by using labor that is one step from being slave in poor countries.

Bush/Cheney have claimed to fight a war, but have refused to ask for taxes to pay for it, forcing money to be borrowed and in the process compromising the safety of the country and demenishing our power to act. Of course what they have done is treason, but better to lock up a fuzzy thinking religious wack job in prison as the American Taliban than to hold the real traitors to account for their crimes.

The results are not going to be very pleasant. What do you think happens when people smoke around open cans of gasoline? After all people have the right to do what they want with their own businesses?

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By Aegrus, March 18, 2008 at 5:32 am Link to this comment

“To be fair, the presidential contenders haven’t been entirely silent. Clinton, for example, did speak on the financial crisis Monday,”

Yeah, so did Barack Obama. Difference was, Obama didn’t just wag a finger at Bush like Hillary did. He actually took the opportunity to express ideas to alleviate the recession.

JS is correct again to address how the Clinton administration did lay the ground for a lot of this economic turmoil. Obama is certainly not going to be a silver bullet for our economic woes, but I think it is very important we get new ideas into the damned executive branch.

On a side note, we should all thank George Walker Bush for giving the terrorists exactly what they wanted. A crippled America. Good job, Georgie. Your war on terror has made us less secure, emboldened our enemies, squandered countless amounts of wealth and you have destroyed our country’s infrastructure. Guess you’re just waiting to go on vacation with Osama bin laden after your term is up, eh?

DO NOT VOTE REPUBLICAN! MCCAIN IS THE SAME AS BUSH. WAKE UP AMERICA!

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By jackpine savage, March 18, 2008 at 4:54 am Link to this comment

Keep in mind that the $200B bailout was in order to stop a run; furthermore, don’t forget that all that money was borrowed…it will need to be paid back, with interest by the taxpayers of this country.

Also, Bears-Stearns had actually filled out all of its bankruptcy paperwork before the sale…just in case it didn’t go through.

What we’re facing isn’t a “slump”; the foundations are cracking.  And we’re just plastering over them with more and more printed money (printed being the same as borrowed).

I lived through the devaluation of the Ruble.  One morning, everyone woke up and found that three zeros had been erased from their bills.  You went to bed with 30,000 R in the bank and woke up with 30.  It wasn’t pretty.

The chicken that cost 400R on Tuesday (just a number) can’t drop to 40 kopecks on Wednesday because the chicken…unlike the currency, has an intrinsic value.  It’s the same situation with oil and the dollar.  If you price oil/gas in 2002 dollars, it isn’t that expensive.

One of the presidential candidate’s husbands helped lay the foundation for this mess…she’s not to be trusted.

It’s hard not to imagine a rude awakening for the Land of Pleasant Living.  I know i wouldn’t want to take over this mess…hell, i’d like to get out before the other shoe hits the floor.

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