Wait, Wait, Don't Tell Me

Actually, I have one more economics-themed post that I wanted to include on the last one about inverted yield curves, but just didn't seem to fit there. This might actually have less to do with economics than it does politics. You decide. But I promise: discussions of which obscure old movies I've been watching from NetFlix are coming soon to this space. Get up for it!

At this point, I wanted to bring up quotes from the op-ed piece President Barack Obama penned for the Washington Post on Thursday. The full article is here (free registration may be required). Obama, naturally, was defending his administration's "Stimulus Package", which people have critiqued as nothing more than a pork-laden spending bill. Obama sounded a clarion call for action, trying to get some amount of bipartisan support from the GOP side of Congress, but here is what he said:

By now, it's clear to everyone that we have inherited an economic crisis as deep and dire as any since the days of the Great Depression. Millions of jobs that Americans relied on just a year ago are gone; millions more of the nest eggs families worked so hard to build have vanished. People everywhere are worried about what tomorrow will bring.

What Americans expect from Washington is action that matches the urgency they feel in their daily lives -- action that's swift, bold and wise enough for us to climb out of this crisis.

Because each day we wait to begin the work of turning our economy around, more people lose their jobs, their savings and their homes. And if nothing is done, this recession might linger for years. Our economy will lose 5 million more jobs. Unemployment will approach double digits. Our nation will sink deeper into a crisis that, at some point, we may not be able to reverse.

Now, I don't want to get too historical on you, but I fear Obama could slide down the slippery slope of sounding too much like Jimmy Carter did in the late '70s.

At this point, I would love to link to a YouTube clip showing the scene from an early episode of The Simpsons, when the townsfolk of Springfield were expecting the unveiling of a statue dedicated to Abraham Lincoln. Instead, when the drape was lifted, the statue was of Jimmy Carter (with the tagline "Malaise Forever" -- classic!), which of course created a town riot. Sadly, that clip doesn't exist on YouTube, but I can provide the actual Carter "Crisis of Confidence" speech from 15 July 1979, archived by the University of Virginia. Side note: who knew that when Bill Clinton used the line "I feel your pain," he was practically quoting Carter?



Economic recessions have everything to do with crises of confidence, of course. If consumers have no faith their jobs are secure, their buying patterns change radically. That is one reason why Hyundai's offer to buy back a new car purchased this year if the buyer loses his or her job is so revolutionary. As almost every other car manufacturer saw huge hits on new car sales, Hyundai's sales actually increased 14%. Consumer confidence levels are so critical to the economy, a dedicated organization exists to track them.

Consumer confidence was one factor why the economic crisis described in Tom Clancy's 1994 novel Debt of Honor was so realistic. Clancy understood that for a foreign entity to wreak havoc on the U.S. economy, all they had to do is sow distrust and fear of our economic institutions (like the financial firms on Wall Street) among the American people. The resulting crisis of confidence brought the American economy low, setting up the rest of the novel. Sorry, I don't want to play spoiler for anyone who has not read it yet.

FDR understood how important consumer confidence was during his first Inaugural address, in 1933, when he famously declared, "...the only thing we have to fear is fear itself." The U.S. was already in the midst of the Great Depression, and only by dispelling the negative cloud of uncertainty and fear could FDR lead the country towards economic recovery.

Getting back to Obama and Carter, President Obama will get his stimulus package approved eventually. There was word on the news today that Congress either already approved or appears ready to compromise on a reduced spending bill, one that totals a mere $780B price tag to future generations.

I just think that if Obama wants to help the U.S. recover from this recession in a timely manner, he will skip the doom and gloom speechifying. For heaven's sake, don't mention the possibility of 5 million jobs going away! He needs to leave the fearmongering to the MSM. They do a great job of that.

The Nuke-yoo-lar Topic of W's Legacy

I friend of mine recently e-mailed an op-ed piece from Charles Krauthammer at the Washington Post titled "History Will Judge." The link provided should take you right to it, and it's well worth the read. I feel sheepish that I hadn't read it or linked to it before, but there are only so many hours in the day for keeping up on the news.

I was happy to see that what was sent in e-mail actually matched the online column, with no edits one way or another. Sadly, I never trust what gets sent via e-mail any more. I don't even subscribe to the age-old Cold War tenet of "Trust but Verify." Whose motto was that? Better than "In God we trust. All others we monitor," which is a motto many spooks might recognize.

The reason why I feel compelled to discuss Krauthammer's column is because I'd been thinking about W's post-Presidency plans myself recently. Seriously. I've been trying to get my head around what W will do in retirement, since I can't picture him being invited to the public speaker lecture circuit any time soon. Which group would have him? Even the die-hardiest of the die-hard GOP faithful have distanced themselves from anything to do with Bush's administration.

I'm sure Bush will continue to have many friends in high places, certainly. He still has his defenders, and he still should have plenty of influence. On what, though? As Krauthammer points out, history will most likely be kinder to W as peoples' memories fade a bit. If no less than Presidents Nixon, Ford, and Carter can all get image rehabs after leaving office, then certainly Bush can, too.

One question for which we really won't have an answer for years to come will be how this very recent Wall Street implosion will affect W's legacy. Nixon (almost impeached), Ford (stagflation), and Carter (malaise) successfully rehabbed their legacies after leaving office; Hoover (Great Depression) did not. I'm not ready to commit to calling these banking problems and economic hard times anything close to another Great Depression. In 1929, over 300 banks had closed their doors even before the stock market crashed. In 1930, over 1,000 additional banks closed forever and the phrase "bank run" struck fears all across the U.S. We're not there yet, and the structural laws and oversight bodies put in place after 1929 should keep us out of another Great Depression. That's the whole idea, at least.

There's no doubt that Wall Street has had its worst week ever (WSJ article, subscription req'd.). I'd like to think that agricultural policies have changed enough so that we won't hit another Dust Bowl again. Unemployment remains relatively low -- last I checked, I think it was around 6%, although as part of the recent rate cut by the Fed, they said they think it will edge up to 7-7.5% by late 2009. Certainly that is still nowhere near the 25% unemployment hit during the Great Depression. Durable goods orders are down and inventories are up, which spell Recession for the economy, and most economists are predicting we're already in a Recession now (more WSJ).

The reason all of the economics issues is important for Bush is that they will have a far more lasting impact on his Presidential legacy than anything else he's done. This is also the key difference from the Krauthammer column, which was published before the Wall Street meltdown. W could be forgiven for promoting a "shoot first, ask questions later" foreign policy. He could be forgiven for domestic spying if it truly keeps us safe from another terrorist attack on U.S. soil. W could be forgiven for acting unilaterally when he felt compelled to do so, even though I think we all remember then-Secretary of State Colin Powell's briefing to the UN Security Council regarding the threat in Iraq. So what if Saddam's WMDs were a figment of his imagination and little more than a ruse to keep the Iranians from attacking? In 2003, everyone agreed they were a real problem. I even think W can be forgiven for his line about looking into Putin's soul back in 2001, as ridiculous as that seems now.

I think Bush will retire to his ranch in Crawford, TX (and everything is bigger in Texas, haven't you heard?), and perhaps have some measure of peace in the months following his departure from the White House. How long can he cut brush? How much mesquite is there in Texas? Would a following administration really put W on the road for sensitive diplomatic missions, as W's father and Bill Clinton have done together? Could you imagine W in France next year, cheering on THE GREAT COMEBACK by Lance Armstrong? It boggles the mind.

If nothing else, W in January becomes fair game for the SNL animation "The X Presidents" as part of their TV Funhouse lineup. So we at least have that to look forward to.