Thom Friedman
The New York Times
I was channel surfing on Monday, following the stock market’s 777 point collapse, when a commentator on CNBC caught my attention. He was being asked to give advice to viewers as to what were the best positions to be in to ride out the market storm. Without missing a beat, he answered: “Cash and fetal.”
I’m in both — because I know an unprecedented moment when I see one. I’ve been frightened for my country only a few times in my life: In 1962, when, even as a boy of 9, I followed the tension of the Cuban missile crisis; in 1963, with the assassination of J.F.K.; on Sept. 11, 2001; and on Monday, when the House Republicans brought down the bipartisan rescue package.
But this moment is the scariest of all for me because the previous three were all driven by real or potential attacks on the U.S. system by outsiders. This time, we are doing it to ourselves. This time, it’s our own failure to regulate our own financial system and to legislate the proper remedy that is doing us in.
I’ve always believed that America’s government was a unique political system — one designed by geniuses so that it could be run by idiots. I was wrong. No system can be smart enough to survive this level of incompetence and recklessness by the people charged to run it.
This is dangerous. We have House members, many of whom I suspect can’t balance their own checkbooks, rejecting a complex rescue package because some voters, whom I fear also don’t understand, swamped them with phone calls. I appreciate the popular anger against Wall Street, but you can’t deal with this crisis this way.
This is a credit crisis. It’s all about confidence. What you can’t see is how bank A will no longer lend to good company B or mortgage company C. Because no one is sure the other guy’s assets and collateral are worth anything, which is why the government needs to come in and put a floor under them. Otherwise, the system will be choked of credit, like a body being choked of oxygen and turning blue.
Well, you say, “I don’t own any stocks — let those greedy monsters on Wall Street suffer.” You may not own any stocks, but your pension fund owned some Lehman Brothers commercial paper and your regional bank held subprime mortgage bonds, which is why you were able refinance your house two years ago. And your local airport was insured by A.I.G., and your local municipality sold municipal bonds on Wall Street to finance your street’s new sewer system, and your local car company depended on the credit markets to finance your auto loan — and now that the credit market has dried up, Wachovia bank went bust and your neighbor lost her secretarial job there.
We’re all connected. As others have pointed out, you can’t save Main Street and punish Wall Street anymore than you can be in a rowboat with someone you hate and think that the leak in the bottom of the boat at his end is not going to sink you, too. The world really is flat. We’re all connected. “Decoupling” is pure fantasy.
I totally understand the resentment against Wall Street titans bringing home $60 million bonuses. But when the credit system is imperiled, as it is now, you have to focus on saving the system, even if it means bailing out people who don’t deserve it. Otherwise, you’re saying: I’m going to hold my breath until that Wall Street fat cat turns blue. But he’s not going to turn blue; you are, or we all are. We have to get this right.
I always said to myself: Our government is so broken that it can only work in response to a huge crisis. But now we’ve had a huge crisis, and the system still doesn’t seem to work. Our leaders, Republicans and Democrats, have gotten so out of practice of working together that even in the face of this system-threatening meltdown they could not agree on a rescue package, as if they lived on Mars and were just visiting us for the week, with no stake in the outcome.
The story cannot end here. If it does, assume the fetal position.
5 comments:
Wow more scare tactics from tommy boy. The premise that American's are just pissed off at Wall Street and want them to suffer is completely false. This bill is an economic version of the patriot act being rushed through so no one really reads it. America has caught on to this tactic.
The mainstream media is attempting to spin this popular revolt as coming from a clueless and reactionary vocal minority. This is not the case. The response has been overwhelmingly large.
This so called minority nearly crashed house.gov while sending comments to their representatives. Their traffic was so high that web admins had to temporarily disable the feature that lets you send a note to your congressperson.
I have often wondered about the ability of American's to grasp complex legislation, but for once they get it. This bailout is corporate candy and does nothing to stop the foreclosures that are driving this crisis.
This is reganomics' at its finest. Pure trickle down. The changes that have been made since the house shot down that last bill are disgusting. Corporate tax cuts? Are you freaking kidding me!
Yes the credit side needs to be addresses, for this I favor a heavier handed nationalization program, instead of a no questions asked handout.
More importantly we must address the supply side of the real estate problem. What we really need is an end to the foreclosure mess. This must happen before our real estate market can heal. American's home represent the majority of their lifetime savings. If the value of their homes continues to plummet wall street will never recover.
We need new rules to force banks to renegotiate the insane loans they tricked people into getting. We need new regulations to prevent his from happening again. We need new powers for bankruptcy judges to allow them to change loan structures just like they can do do for large corporations.
We need to give our vets a similar deal to the one we gave WW2 vets like my grandfather, cheap loans to buy houses.
We need a serious spending program like Obama has proposed to kick start a new green industry.
ok enough ranting for me today, I doubt it matters much as I'd be surprised if the house doesn't bend over and pass the senate bill.
For a more coherent rants:
Now is the Time to Resist Wall Street's Shock Doctrine by Naomi Klein
Born-Again Democracy
Dave, I appreciate your patriotism and disdain for the people who dont deserve to saved, who will be by this bill. And as interesting as your ideas are about how to fix this financial crisis, its pretty clear you dont have an MBA in economics. People who have spent years studying the economy and the global history of credit crisis, on both the left and right, conservative and liberal, agree that it is imperitive that the Fed overwelm the market with capital. It actually is the ONLY way to get the credit markets going again, and the credit markets affect every part of the economy, from Wall Street to Main Street.
I hate to say this, but you actually are the average American voter Friedman refers to who reallty doesnt understand the gravity or complexity of the situation, and just lashes out with blind rage against a bill that "bails out" the banks and Wall Street firms. Listen, I dont like saving these companies any more than you do. But if we dont, we will suffer the same fate as other countries, whose governments sat on the sidelines in the past and watched their national economy go into a 10+ year depression.
I agree that the bill isnt perfect, and contains provisions I dont agree with, and will save people who dont deserve saving. Yes, thats horrible. But you need to put on the clear and sober glasses of an economist and look at the situation OBJECTIVELY. This is an ECONOMIC EMERGENCY of EPIC proportions. The rescue bill is emergency legislation and it must get passed ASAP, imperfect as it is.
Both on a personal level, living in San Diego, not owning any stocks or bonds, not knowing people who have lost their jobs or homes, and on a policy level - that the rescue plan is WIDELY supported by economists on both sides of the aisle, shows me you are completely out of touch with reality you are. We are experiencing an unprecedented economic event that might occur less than once per century, and you would have our government sit idly by while the credit markets freeze over, the dow tanks, and the US economy implodes?
Dave, I sincrerly appreciate your patriotism and the desire to not see US taxpayers foot the bill for Wall Street's fiscal irresponsibility, but you must understand, as Friedman says, the world really is flat, and it is technically impossible to save one half of a rowboat from sinking.
Dave, I read the Naomi Klien link, and here is a quote: "It would be a grave mistake to underestimate the right's ability to use this crisis."
Republicans REJECTED the bill. Get a fucking clue.
They held out for a more favorable version of the bill which they new the senate would produce. They still have a majority in the senate.
Its a rock and a hard place man. There is no solution thats perfect here. I hate the bill and I hate saying they have to pass it, but I think thats the case. The question now thats it passed is, will it have the necessary effect in time? I dont think anybody knows, all we can do is be hopeful that it works and that the people overseeing it act responsibly and with the best interests of the people of the Unites States in mind.
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