Are Americans worthy of being saved?
During this financial crisis I have been wandering the halls of academia, blog space and the business world and I’m shocked by our people’s lack of comprehension about what is going on in the economy. The misperceptions about the current banking crisis, its seriousness, the implications, and potential solutions defy understanding. There are times when I just shake my head.
I have found that the groups of incomprehension fall into four camps:
It’s a bailout
Even the capitalists in the room get this piece of PR wrong.
Folks, the plan is to buy assets; that’s not a bailout, that’s an investment. We could make a lot of money on this plan, we meaning the citizens of the country, at the expense of the evil bankers that everyone is so enraged about.
This is because these assets are not worthless, they are just mispriced. Sweden went through a similar bank asset rescue and made a nice profit on the deal. If the sovereign (that’s us) can’t make a buck at a time like this, well, then we really get what we deserve.
We should build bridges instead
…or hospitals, or roads, or schools. All of a sudden fiscally conservative people have found all sorts of stuff they want the government to do. Granted I hear this most from the ultra-liberal faculty over at the New School, but otherwise sensible midwesterners are saying it too.
Have we all forgotten how many years (yes, years) it takes to build a bridge, even if the designs, permits, plans and materials are already available?
This is the same argument that in variation goes: “Just give Paulson $5 or $10 billion this month and we’ll see how he does. At the end of a year of so we’ll know better.”
This month? A year or so? The banks may have two or three days left. Maybe. The whole system probably failed last week except for the heroics of the Fed. We certainly do not have two or three months, much less years to fix this.
Most people just will not believe this, first because they don’t watch Bloomburg terminals completely spaz out showing numbers never before seen in history, and second because they don’t believe the people who do. That may well be our greatest tragedy.
Let ’em fail
I can’t tell you how many people actually say this out loud, like it will not affect them or their children if the financial system collapses.
The difference between a depression in 2008 and the one in the 1930’s is that the violence would be so much greater. I don’t think folks appreciate the implications of dramatic unemployment, lowered standards of living, and a collapse in governmental infrastructures when the means of simple people to do vast damage with powerful weapons and contagions is unprecedented.
I was actually accused of being a socialist (!) in the comments section on another blog because I offered the idea that intervention in the banking system could prevent firestorms. (Actually I was called a socialist because I have an MBA, but go figure. It must be the New School t-shirt)
Letting Wall Street fail today is like saying that the best way to make a city’s buildings fire proof is not to enforce building codes and retrofit, but let them all burn down in a conflagration – kind of like the great fire of London. Then we can rebuild.
Yep, that’s what they are saying out there. Funny, on the West Coast they say fire, on the East Coast they say earthquake; it’s a ‘do unto others first’ thing I guess.
I shudder when these people talk.
They did this to us
I’m all for tarring and feathering a few execs for being stupid and actually spending time complying with SOX when they should have been running risk models. But the root of this mess is not them, it’s the vast over borrowing by the average American. We did this, all of us. Wall Street just let us wrap ourselves up in piles of crappy debt.
We’ve forgotten about personal responsibility in our safety net, social securitized nation and while our presidential candidates are leading the finger pointing charge, creating boogie men for us to hate, the only people who need to “change” are all of us. We did this, and that’s why we need to use our tax money to fix it.
So I ask myself, is the nation worthy of saving? And I’m having trouble with the answer. I want to think that the land of Franklin and Hamilton, Twain and Edison would be able to see through this mess, but when I listen to Republican congressmen and vast swaths of the American public say they will not support the purchase of assets on the cheap to bring calm to a major social institution in our economy, I wonder.
Maybe we should just let it burn and start over. How sad, because that doesn’t have to happen.
More from Dougist.com on the Financial Crisis