DOWNTIME Part 4 – Blunders of the Dunderheads
In June of 2008, U.S. President George Bush taught us that “one of the things important about history is to remember the true history.” With that as our guide, and this being the final days of a truly historic presidency, I’d like to reflect on the wisdom of the previous year that got us where we are now.
Early in 2008, George Bush calmly proclaimed, “I don’t think we’re headed to a recession.” Later in the year, he clarified his position on the economy when speaking of the frozen credit market: “This thaw — took a while to thaw, it’s going to take a while to unthaw.” When it became clear that we needed the thaw to unthaw, one of Bush’s appointees, our head treasurer, Henry Paulson, assured us that he had scrutinized the world of finance and had not “seen any scenario where the American taxpayer needs to be stepping in with more taxpayer dollars.” He capped that assurance by stating that the subprime mortgage debacle was “largely contained.” Then The Wall Street Journal wrote, ““Paulson, a former chief executive of Goldman Sachs Group, repeated his view that the U.S. economy is fundamentally on sound footing and would dodge a recession.”
Quick to recognize a trustworthy source, Republican presidential candidate, John McCain, made Paulson’s assurance that the economy was fundamentally his campaign slogan. That chant along with… “I’m always for less regulation… I am fundamentally a deregulator” didn’t bear a lot of mileage as slogans. Both statements seemed, however, like a good answer to public concern in March when we were all “whining” about the economy. McCain let us know that he had a good grip on these things because he was “chairman of the Commerce Committee that oversights every part of our economy.” Maybe he meant overlooks.
The federal government would later (too much later) discover what I was already saying against these springtime voices: the economy had already been in a recession for a few months. It’s always comforting to know that the president of the most powerful nation on earth along with the leader in charge of that nation’s treasure along with the man who was in charge of overseeing commerce all had no clue whatsoever where the economy actually was. They all predicted it wasn’t going into recession, while it had already been in one for three months. You can’t always blame people for not seeing something coming, but you can certainly blame them for saying it isn’t coming when it already did.
All of that was prelude to the day when Alan Schwartz, the CEO of Bear Sterns, boldly told the world that his company had no liquidity crisis. In fact, he claimed they were sitting on a fat cash cushion. That was easy for him to say because he personally was sitting on a fat cash cushion of a $16 Million bonus from 2007. That was on top of his $35 Million salary. Unfortunately, the corporate cushion turned out to be a whoopy cushion and Schwartz full of gas because Bear Sterns was sold five days later in a fire sale for about a penny on the dollar of its former worth. Schwartz is being very quiet about his cash cushions these days. Nice to know that the overpaid leaders of great companies haven’t got a clue that their companies are already as good as bankrupt or that they walk away from such lies filthy rich. Denial, whether intentional or just idiotic, reigned supreme in 2008.
In July, Chairman Bernanke (I like to call him that, now that he runs one of the organizations in charge of socializing the American economy) told America that Fannie Mae and Freddie Mac were “in no danger of failing.” Two months after his assessment, this same man nationalized Fannie and Freddie because conservative Republican administrations know one thing well: the best-run economies are centrally controlled by government. But liberals had nothing to do with this because they didn’t even know it was happening. So, they had to be innocent. As Congressman Barney Frank said in September, “These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis. The more people exaggerate these problems… the less we will see in terms of affordable housing.” Again, it is reassuring to know that a man with keen intuition like Barney was in charge of the House Financial Services Committee.
Getting a true sense of the visual acuity of those in charge of the greenest money on God’s green earth helps us understand why the United States may be facing a failure bigger than the one that hit the Soviet Union in the 80’s.
When September came, however, Secretary Paulson (I like to call him that since he’s in charge of the other organization in charge of socializing America) had a miraculous vision recovery and rang all alarm bells, loudly proclaiming that he had now seen that it was urgent that Congress, without thinking or debating, immediately kick in $700 Billion to bail out the economy that was fundamentally strong. He did this with a straight face, as if his penetrating shortsightedness in former months proved he was a man who could simply be trusted on such propositions. The worst part was that congress with an equally straight face actually gave the money to the man who thought we would dodge a recession how can i buy ambien online three months after we were already in it. Who better to be trusted with an urgent worldwide recovery operation than the man who never saw the problem coming? Paulson not only kept his job, he became Economy Czar overnight of the new U.S. Socialist Republic!
You thought I was only calling him “Czar” in humor, right? “Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.” (the Treasury Department’s proposed Emergency Economic Stabilization Act, September 2008) I guess he thought he was going to EESA thata one righta through congress. Fortunately, they revised that part … but only a little.
And why particularly $700 Billion? Well, according to one Treasury Department spokesperson: “We just wanted to choose a really large number.” OoooKaaay. Why do I feel like I’m watching a bunch of inebriated clowns playing in a sandbox? I guess if you’re going to have absolute power, though, it’s nice to have it over an absolutely large amount of money. While this was the single largest bill ever to be considered by congress, the Bush finance team said it was essential that congress not think about it. Ben Bernanke told congress, “If we don’t do this [as in now], we may not have an economy by Monday.” I think any reasonable person can see that a weekend of deliberation should be sufficient for deciding whether to overturn the entire U.S. economy and pass the largest spending bill in history because the man who never saw the crisis coming wanted “a really large number” to throw around at his own personal discretion.
By November, Secretary Paulson comforted us all again by telling us, “Our major institutions have been stabilized. I believe that very strongly.” Apparently the program was a success. Immediately, the largest bank in America and some of America’s biggest blue-chip manufacturers went bankrupt. Again, I was reassured in knowing that the Economic Czar still had no idea what was happening in the economy and that he felt very strongly about that. Of course, Paulson was also a man sitting on a nice cushion. He had made as much as $50 Million in a bonus one year. That does take the bottom out of a recession. (The reassurance I keep feeling, by the way, is not that the country is strong, but that my own thinking is still clear because I keep watching those I disagree with skid on their faces in spectacular style. The odd thing is how they keep doing it! I would have thought they would have lost face a long time ago.)
As I write this article, I can hardly believe I’m quoting the real world. Yet, just when I thought these dim bulbs would surely brighten up, came a statement that would put a golden smile on the face of the reddest Russian. As we closed out the year, the president of the United States proclaimed, that he had to “abandon free market principles to save the free market system.” Surely, I just slid down Alice’s rabbit hole into Blunderland where everything is backwards, right? Did you ever think the United States could become an entirely different country as fast as the U.S.S.R. did in the 1980’s? Well, you might have thought that; but did you ever think that the whole populace would accept it with hardly a blink?
Must we call ourselves the U.S.S.S.R. just to keep from becoming confused with the other United Soviet Socialist Republic? Ah, but the U.S. is different because that other mob kept a strong military grip on its populace in order to maintain central economic control; whereas, our populace goes along willingly. If you think so, note this: the Phoenix Business Journal recently quoted the U.S. Army War College as stating it is testing the “use of American troops to quell civil unrest brought about by a worsening economic crisis.” On the bright side, this means that part of the government has finally ended its denial and is recognizing that the end of the economic collapse is not in sight: “Economic collapse, terrorism and loss of legal order are among the possible domestic shocks that might require military action with the U.S.”
That bit of news from Phoenix leads me to wonder if Senator McCain is reading the same local papers the rest of his State of Arizona reads. In the end, it turns out Sarah Palin was not only the smartest candidate of the two; she was downright visionary. She was the first to say she could see Russia from her house. Many people laughed. Now all of us who live in these United States understand that we can look out our windows and say the same thing … from any part of the country.
As George Bush said earlier this year, “I’ll be long gone before some smart person ever figures out what happened inside this Oval Office.” Now, ain’t that the truth about history? I think it was George’s way of telling us what wasn’t on his mind. And, thanks to the dunderheads of economics throughout government, the rest of our heads will be reeling for a long, long time. You see, before we can remember the true history, someone’s gonna have to figure out what actually happened.