Saturday, February 28, 2009

As a nation, we’ve been eating our seed corn for a generation. In corporate terms, we’ve been paying dividends that have exceeded our earnings. No matter what, our leaders assured us that this could go on in perpetuity.

So, here we are having blown in the interest of instant gratification a big slug of, if not all, our collective capital. Now what? Continue to believe that, if taxes are low enough, our economy is a perpetual annuity; or take the chance that our government, the investor of last resort, can intelligently underwrite the risk of rebuilding our devastated capital base and give our kids and grandkids a shot at similar opportunities to those we had? Clearly, it depends on one’s point of view and, more important, one’s perception of reality.

For nearly three-quarters of the the generation, Republicans held the nation’s highest office and point position for the country’s moral authority. During much of the time that they didn’t occupy that position, they controlled the nation’s legislative agenda. Now, the piper has called in his IOU by delivering to us an extraordinary global financial meltdown and collapsing economy.

President Obama’s proposals also are no less than extraordinary, but if it's true that “extraordinary times call for extraordinary measures”, one would not sense that the Republicans who teed up this mess feel that it’s anything more than business-as-usual. Either way, for the foreseeable future we will find ourselves in parlous times. The only difference is where we end up.

Monday, February 9, 2009

South Asia Observation

Q. What do you call someone who suffers anxiety related to the India-Pakistan conflict?

A. A Kashmir Sweater.

Tuesday, February 3, 2009

Treat the Disease

When financial markets, arguably the global economy’s most vital organ, failed last fall they were resuscitated by government-powered defibrillators, but not before some near-fatal fumbling. Now the markets lie barely conscious in the ICU while world and national leaders ponder and debate courses of treatment that will result in “recovery”.

The symptoms are being dissected ad nauseam in the press, the halls of government and other august forums including the kitchen table. But, while “recovery” is a freely used term, seldom does the discussion include either its definition or, worse, that of the disease we need to treat.

  • Does “recovery” mean restoration of bubble-driven economies of the recent and distant past, so aptly described by Eric Janszen in the June 2008 Harpers; or does it mean an environment of sustainable growth and balanced expectations?
  • Is the disease a virus transmitted only through the financial community’s unsupervised greed; or is it a global pandemic of highly contagious self-indulgence and instant gratification that originated in the developed world?

These are questions that need to be answered in order to put policy and its objectives into the proper perspective.