June 7, 2009
The Economy Is Still at the Brink
By SANDY B. LEWIS and WILLIAM D. COHAN
WHETHER at a fund-raising dinner for wealthy supporters in Beverly Hills, or at an Air Force base in Nevada, or at Charlie Rose’s table in New York City, President Obama is conducting an all-out campaign to try to make us feel a whole lot better about the economy as quickly as possible. “It’s safe to say we have stepped back from the brink, that there is some calm that didn’t exist before,” he told donors at the Beverly Hilton Hotel late last month.
. . . The storm is not over, not by a long shot. Huge structural flaws remain in the architecture of our financial system, and many of the fixes that the Obama administration has proposed will do little to address them and may make them worse.
. . .
Keeping that statement in mind — as well as an abiding faith in the importance of properly functioning capital markets — we have come up with a set of questions meant to challenge a popular president, with vast majorities in Congress, to find the flaws in the system, to figure out what’s being done to fix them and to get to the truth about the difficulties we face as we set out to restore the proper functioning of our markets and our standing in the world.
Everyone likes articles that reflect their personal opinions and I am no different.
I have been saying this stuff for years, with not much of an audience. Here, finally, is an editorial on the pages of the New York Times that ought to be on everyone’s required reading list.
The reason Obama has not taken a more direct line of action is both political and financial. Politically, huge money-interests still dominate congress. Economically, he is desperate to avoid a general price collapse (1929-1932) that would devalue overvalued homes and wreck the house of cards Wal-Mart (and their like) have built upon so-called consumer demand.
That’s understandable and may be good politics, but it’s not good economic judgment. To realize why, one merely needs to understand that FDR came to the nation’s rescue at the bottom of a total financial collapse (three years into the Great Depression). He had a fear-based mandate that pales al Qaeda by comparison. Obama governs from a position far different, and while the stakes are similar, the willingness to sacrifice is not there (in congress or the nation).
What that means, only history will tell.