So -- the financial markets, the incoming administration, Thanksgiving. What do you think?
If you follow the markets at all -- and how is it possible not to? -- it's hard to find any comfort. The Dow down 6,000 points in a year -- 45 percent. Investors holding paper losses of $9 trillion. Profits plummeting. Cutbacks. Layoffs. Companies (the U.S. auto companies?) going toes-up. The dread R and D words -- recession, deflation, depression. Many people are wiped out, and find me someone -- anyone -- who isn't worried.
But hey, the government is coming to the rescue . . .
In the contemporary cliche, that may be more part of the problem than part of the solution. To quote from a recent news account, "In little more than six months, the government has put a federal guarantee behind the biggest Wall Street firms, taken over half the $11 trillion mortgage market, gained ownership of the world's largest insurance company, enacted the biggest financial bailout in history, and (become) the lender of last resort for corporate America."
And you're not happy about that?
It's all being done in the name of stabilizing the markets and the financial system -- to build both liquidity and confidence. Yet much of it is mere nibbling around the edges. The best way to stabilize the financial system is to stabilize the dollar. The current infusions and regulatory Band-Aids may help bring a short-term fix, but they will not prevent future liquidity and confidence crises.
Insufficient regulation brought us to this point. That, and the 1999 Gramm-Leach-Bliley Act that repealed the 1933 Glass-Steagall Act separating commercial and investment banking.
You're mouthing the Obama campaign line -- wherein he and his brain trust, recently empowered further by Alan Greenspan's bizarre "confession" about the failure of free-market economics, are blaming the subprime lending crisis that cascaded into the financial collapse that morphed into the recession on . . . deregulation. It's baloney.
But the financial people around Obama -- his new team -- are brilliant. They've got the answers.
Many of them are not new but Clintonian retreads -- so much for Obama's "change" mantra on that front. And their answer seems to boil down to more intrusion, more regulation, and more redistribution. Throwing more taxpayer money at every unproductive entity with its hand out. They're wildly supported in all this by the increasing Democratic cohort in Congress, many of whose members (most notably -- regarding for instance Fannie Mae and Freddie Mac -- Barney Frank and Chris Dodd) have contributed hugely to crushing the economy.At least we can hope they'll do the right things.
Hope is not a strategy. Yet that brings us to Thanksgiving -- the opening of the holiday season that is, perhaps fundamentally, the season of hope. In this season, maybe the current condition of the global economy will focus Americans on essentials: family, nature, eternal verities, a new frugality, a simpler life. With its focus on money and "things," materialism diminishes our appreciation for what we have. It fosters frustration, exasperation, even anger at what we don't, and a redefining of wants into necessities and have-to-haves.
How does this relate to the financial markets and the incoming Obama administration?
The stock market is, alas, but another form of gambling -- hardly different from playing the ponies, the numbers, the slots. Whether the current collapse is an unavoidable cyclical readjustment or was brought to us by a perfect storm wrought by the ignorant, the insensitive, the self-serving, and the malign -- it is what it is.
Mere mortals, the everyday rest of us -- working saps and the retired -- can do little but husband their remaining cash as best they can. A preoccupation with the markets -- with the crap tables -- suggests a motivating preoccupation with the material. And as the song says, "You've got to know when to hold 'em, know when to fold 'em, know when to walk away, know when to run."
Maybe. But it is shared by our greatest living historian, Britisher Paul Johnson, who has written extensively about disintegrating civilizations:
"The financial crisis, detonated by greed and recklessness on Wall Street and in the City of London, is for the West a deep, self-inflicted wound. . . . If we seriously wish to repair the damage, we need to accept that this is fundamentally a moral crisis, not a financial one. It is the product of the self-indulgence and complacency born of our ultraliberal societies, which have substituted such pseudo religions as political correctness and saving the planet for genuine distinctions between right and wrong and the cultivation of real values."
He laments the demise of "industry and thrift," and cautions that "we are traveling along the high road to incompetence and poverty, led by a farcical coalition of fashionably liberal academics on the make, assorted eco-crackpots, and media wiseacres."
Johnson's jeremiad meaning, exactly, what?
Meaning that in the midst of a terrifying financial tsunami, and -- with Obama -- the coming to power of precisely the ideologized panderers Johnson knows too well, hope (certainly not a strategy) is all that is left to us. Diaphanous, gauzy hope and whatever rope we can find to batten down.