Crisis Managers vs. Naysayers
By Steven Pearlstein
Friday, June 12, 2009
Last fall, during the darkest days of the financial crisis, if you’d predicted that by the middle of this year, 10 of the biggest banks would have paid back all $68 billion of their bailout money and begun to raise private capital again, that General Motors and Chrysler would have been run through a dramatic bankruptcy restructuring and that the stock market would be up 35 percent from its lows, I probably would have given you 10-to-1 odds that you were wrong.
Now that it’s all come to pass . . . Instead of celebrating this feat of economic policy, however, there are those who seem more in the mood for second-guessing and recrimination.
Indeed, list me among the nay-sayers and, lest anyone compare me to a certain radio-maniac who hopes President Obama fails, let me sign, in bold-face letters, on the side that hopes for reconstruction.
We have had enough of deconstruction. But it didn’t happen in the past ten years, it’s been going on for at least thirty. As they say, life is what happens while you’re busy doing something else.
Check out Peter Schiff (who isn’t buying the premise either) in an appearance of the Jon Stewart Daily Show, both of them owning a much larger platform than mine from which to speak. But Schiff is saying the same words. I have long beat the drum for letting those who are ‘too big to fail‘ fall out of their collective executive suites and fail–replaced by whatever (re-regulated) markets choose to replace them with.
I would suggest a little jaunt down memory-lane, for those who think this is new territory. Early 1930 and 1931 were replete with sighs of relief that ’29 was finally over and things had bottomed out. Then the actual rip-tide of crash began.
Everyone wants Mr. Obama to be FDR reincarnated, but Roosevelt came into office under much different circumstances. The country had already fallen on its butt, gasping from the floor, destitute and terrified. No Wall Street guys are jumping out of windows today. Patching the Savings and Loan crisis and bailing out Long Term Capital Management has them in a”sorry ’bout that, now save me” frame of mind. They have reason to believe it will all blow over.
Amazingly, we keep doing it and the crew in the White House and Congress are at it again. It’s not unpatriotic or defeatist to say they are wrong and the worst possible thing that can be done is to put a bandage on this wounded economy, give it a couple of aspirin and send it home.
If that’s the administration’s political reasoning for victory in the 2010 mid-term elections, they have no idea how angry their abandoned supporters are out there in the hinterlands (anywhere outside Washington’s beltway).
Failing to understand the problem is what has brought us to financial collapse. What failing to deal with it will bring is anybody’s guess, but I share a hunch with Peter Schiff.