There are good reasons to hope — and believe — that the Federal Reserve will ably manage the turmoil in the financial markets. Its surprise lending rate cut on Friday and earlier infusions of cash into the banking system show that it is committed to crisis management.
But the Fed’s moves also show that it believes the markets’ problems have become a threat to the broader economy. For that reason, calming the markets should be seen as only a necessary first step toward addressing much bigger issues — issues that President Bush and his aides continue to deny.
The real work — that of leaders, not managers — is to understand how the economy became so vulnerable to current global market instability, and to articulate an agenda for reducing those underlying weaknesses. There is no return to “normal” that would not be the same as sticking one’s head back in the sand.
Where has the New York Times and the venerable Wall Street Journal been these past years of a ‘bubbling’ housing market. Where were your erstwhile economic journalists?
The real work–that of newspapers, not sycophants–is to make their readership aware of anomalies in the system. This was not a blindside, but it was blind incompetence that allowed it to bubble (there’s that word again) into a crisis.
For this, the NYT is as guilty of ‘head in the sand’ blindness.