This WaPo article points to a political problem that complicates immensely our efforts to deal with our economic problems: people don’t trust our political institutions to deal competently with these issues.
Part of that is simply emblematic of the gap between our political (and business) elites and those folks who live in flyover country. Part of it is also an unwillingness to look in the mirror and recognize how our unrealistic expectations (of the appreciation of our houses, the size of our houses relative to our incomes, the returns we can expect on our investments) left us open to the, er, creativity of various sorts of financiers.
So we face at least a threefold challenge. The first is putting together a package that has enough votes to pass Congress. I’m confident that after Rosh Hoshonnah, our "leaders" will look at the markets and the polls and find the will to do something that restores a modicum of confidence to our financial industry. That’s the easy part. Yes, you read that right.
Second, we have to come to grips with the fact that in our fabled competitive global marketplace, hard work and even harder savings are going to be rewarded with more modest returns than we were accustomed to. Those who want to get rich quick (most of us) will have to learn that that often also means getting poor quick and that the royal road to "commodious self-preservation" doesn’t get us there quickly and effortlessly. We’ll have to learn that cleverness is not a virtue, and that self-restraint and patience are. That’s hard, but there are plenty of places where we can learn it, if only we turn off our televisions and talk to our grandparents or go to churches (with the noteworthy exception of those that preach the gospel of prospertity).
Third, our political and economic elites are going to have to rebuild public trust in our institutions. I don’t have a magic prescription here, but a little less clever talk, a little less pandering, and some genuinely sober action are surely good places to begin. If there is a human nature, courage will be recognized and admired, even by people who don’t see much of it.
Here, here. Spoken like a true conservative.
Washington is strangling America's economy.
Washington is destroying America's ability to produce the energy necessary for the country.
And now Washington is trying to finger as the culprit Capitalism itself, which is the only mechanism capable of shouldering the vast obligations Washington has assumed.
Sure, certain creatures on Wall Street played a part.
But the villain in this drama is Washington, specifically, Democrats on Capitol Hill.
Just call George Bush "Chicken Little". Thanks to Henny Penny, Loosey Goosey, and
Turkey Lurkey's (Rumsfeld , Wolfowitz and Cheney's) lies of WMD in Iraq, the American public just doesn't believe that our economic sky is falling. I think you know how that story ends.
It is easy to get into trouble if you take a chance on something without being informed, or take action based on faulty information or assumptions. Currently, the pros and cons of payday loans are being hotly contested, and just what is in the future for the industry. Some of our leaders, from both sides of the aisle, have even enacted legislation at the state and local levels that makes it difficult to get a payday loan if you need one, and some have banned them outright. Still others, such as Barack Obama, are looking to get rid of the industry altogether; which is based on the idea that payday loan lenders are nothing more than legalized loan sharks, which is just outright faulty logic. This is the time to educate yourself and your friends so all can preserve their right to financial independence.
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Why in God's name is Congress taking two days off in this crisis? And why in God's name does no one have the guts to complain about its doing so? To the inevitable question: "Would you want them to work on Thanksgiving or Christmas, if need be?" I'd say: Yes, certainly. And unlike the Jewish New Year, those days aren't even considered "business" days in the economy. PC be damned -- a Rosh Hashonah recess in the face of a possibly imminent depression is "hyphenated Americanism" at its worst.
When you say that cleverness is not a virtue, but self-restraint and patience are, that goes as well for right-wing NLT bloggers, who have never missed a chance to denigrate their opponents with snarky and malicious partisan nonsense. There is no get-rich quick scheme in intellectual matters either, so you should turn off these pseudo-intellectuals and get back to reading real books (and not theirs).
What a promising title. As the risk of seeming clever I will boldly paraphase Abraham Lincoln who in my memory said of public opionion that it had a central idea from which all its minor thoughts radiated. The central idea is equality, but one of its possible solar flares is the idea of political capital.
Almost everything comes back to political capital, and this is why cleverness is a virtue and not a complete digression.
Abraham Lincoln was a great student of the bible which is why I believe he might have suggested that the relevant biblical story is that of Jacob and Essau.
I am in agreement with democrats when it comes to the disgusting behavior of places like Payday loans. You might as well be selling soup to someone who has returned from a long hunt. These places prey on college students and minorities and irresponsible soilders. If you don't believe me visit Lawton OK. Like Essau, when the field artillery soilders come out of the field they flock to payday loans before a good night of drunken debauchery. If you really want to see this exagerated go see what happens when deployments returning home coincide with tax season. How does PFC Johnson have a 2005 Escalade on 22"? Odds that he financed it at over 20% interest and left the dealership with more money than he came with...
Let me be honest, as a poker player I no longer believe that I can make enough money at the lower limits where my bankroll can suffer fluctuations. I just can't statistically compensate for the house rake...this is because fools go broke, and in a tighter economy fewer fools are still playing. If it were not for the Essau's I would go broke. If it were not for the Essau's Payday loans would go broke.
Now if I were to start up my own Calvinist church of gospel prosperity I would link this back to the apostle paul, and grant sainthood to Mike Caro and other preachers of positive expectations determinism. A very low bare bones but stringent moralism would be preached.
Obviously howhever I would never do this, because I still have some lingering doubts concerning the possible existance of a real God, and my message would quite simply be too ironic.
But what seems clear to me is that everyone is preaching belief in a God that doesn't fully restrain them.
Essentially I am not here to make a particular point, nor do I want to damn payday loans for being wiser than I am(seeing as how I will never collect the loans I made folks in order to save them from 40% interest rates, but loans like this are super common, to the point of almost being cultural, in the military/poker community.)
As far as I can tell democrats did screw up Fannie and Freddie in an effort to save folks from the likes of payday loans. As far as I can tell my cousins(I exagerate the stakes I play at in thinking that I have common ground with them) the shortsellers pounced on the fact that the books were cooked, causing a general downward spiral. What was a $500 million dollar overstatement had ripple effects in projections, which had ripple effects in projections, which had ripple effects in projections, which led to a 700 billion bailout plan whose dismisal led to 1.2 trillion dollar downgrade in the U.S stock market and trillions more accross the globe, leading perhaps to a drop in crude oil prices thus vindicating Hayward over Deenen. The really strange thing if gas prices drop on the heels of no bailout..well look lets just agree that we are in a Knightian uncertainty(not even 100% certain of what the entire argument is but I am working on it.), butterfly effect environment.
I don't know but I tried to argue with Dr. Schramm about it in terms of scientists "solving" political affiliation. The way I see it, this is needed in part to shore up public trust. In other words everyone has a need to reduce things be they rare or great or common or obtuse or obscure to terms that are familliar, or technical or objective, that in doing so they can be convince themselves that they understand them. In some sense the liberal arts education feeds this sort of basic promise. Or perhaps the basic promise is itself fed by the central idea of equality which Lincoln claimed was the radiant source.
In any case I am damn near broke and thus need to write a book or found a religion that claims to give answers.
Joe:
Positive post. The people seem to not understand that they are directly affected by Wall Street--they do not understand that Wall Street is mainstreet. And our "leaders" have not bothered to make the argument that this is the case.
Nice post Joe.
Careful, John Lewis, but your account of the payday loan fiasco, and the vulnerable poor, the college students, and the soldiers, is sure to draw the virtue and prudence lecture from the neocons. They have exploited, and then lectured to, the vulnerable among us for decades now. That nation of whiners hates freedom when it restricts the market, as you suggest.
There is a "golden bullet" to this crisis which no one I have seen until this morning has raised. See Judy Shelton's article in the WSJ. The monetary elites, manipulating the value of the dollar, have lost the trust of our people with good reason. They cannot restore it by more manipulation, bailouts, and schemes that put the Treasury at risk. (I say this even as I mildly favor the "bailout" bill as an emergency measure.)
The bullet that truly can begin to solve the problem is to restore the stable value of the dollar by relinking it to a measure of gold. That linkage was eliminated 35 years ago by Richard Nixon. All that is needed in essence is for the Federal Reserve to target a fixed gold value (let's say $850 per ounce) and never change it again, by law.
Stabilizing the value of our currency would vastly strengthen the dollar on world markets and stabilize stock prices. It would end the two parties' experimentation with inflating and deflating money. It would obviously reduce interest rates by eliminating the premium for future uncertainty.
Above all, relinking the dollar to a gold base would calm people across the country who are distressed by the unpredictability of the value of their assets and income. Were McCain to propose something along these lines, he would smash through Obama's current lead. Obama after all has not offered a single serious proposal to deal with this financial crisis.
There are other important reforms having to do with phasing out Fannie and Freddie, ending the "affordable housing" quotas imposed by law on them, and getting the mortgage lenders out of the absurd Community Reinvestment Act regs requiring them to write high risk mortgages in unstable communities. But I am convinced that in today's turmoil, restoring the gold-backed dollar is the key to reviving confidence in the financial system and would in itself propel McCain to victory.
This is hilarious. The American people make a stand on values outside of the lust for more spending power and everyone calls them a bunch of dumb yocals. The fear mongering is unbelievable. Why is it so important to restore the trust in elites? Mabye its time to sieze the power of people outside the elite via the internet and have a major realignment. I wonder if they were running a drill for this economic disaster when it happended? Nothing will get considered except the huge handout. This entire deal is so much like the 911/patriot act deal its not even funny. Where is the ignorance in biting the bullet and not prolonging our problems to our grandchildren. The idea that we will see returns on our "investments" is laughable. They want to pay way over market value for the assets.
Joe,
I have penned a limited response here.
The New York Times has run a transcript of John McCain’s stump speech in Dayton, Ohio, and the Arizona senator appears to be in a fighting mood. “I'm an American. And I choose to fight. Don't give up hope. Be strong. Have courage. And fight,†he says. He issues the call to fight for what’s right for America, for justice and opportunity, for the children. But with items like Issue 5 on the agenda for Ohio voters, McCain makes sure not to gloss over the economic concerns that swirl above like dark clouds. He’s ready and able to point out that “Barack the Redistributor†will spread the wealth but not put policies in place that create more. Obama believes taxes are too low, McCain says, while the senior senator believes spending as was the norm during the Bush administration is too high. Payday loans do not draw McCain’s ire as much as Obama’s promise to bail out Wall Street bankers with $750 billion of taxpayers’ money. The “maverick’s†ultimate plan for the economy is to “get it out of the ditch and back in the lead.†That, he feels, will enable Americans to rest easy, knowing that they’ll be passing on a better life to their children and grandchildren.
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