A new presidential administration begins, after a bruising election in which the losing candidate was accused of wanting to drastically escalate an unpopular war... perhaps even to use nuclear weapons in the process. However, the winner, contrary to the expectations of his supporters, takes no steps to end the war, but instead changes the strategy in such a way that even more troops are needed. His supporters, disillusioned, stage protests and eventually march on the Pentagon.
The first two months of the Obama administration? Well, maybe... but I was talking about LBJ. Of course, he had already been in office for a while at the time of the 1964 election -- due to a bit of unpleasantness down in Dallas -- but I clearly remember how Goldwater was portrayed -- by the media, as usual -- as a "warmonger", and as "psychotic". So people expected better of Lyndon, once he got a direct mandate from the electorate, but instead they got Rolling Thunder (the architect of which, Robert Strange McNamara, is still at large, BTW). In all of the subsequent discussions of "what were the 60s", and "what did they represent", and "how did they happen", and "what did they lead to", no theory can be taken seriously that does not include Vietnam, LBJ, and the draft. Similarly, no discussion of the current economic crisis is complete without including Iraq and Afghanistan. And yeah, I know, the on-the-spot historians have already agreed that the whole thing started with subprime mortgages, which were forced on the mortgage and banking -- and then investment -- industries by the goverment, i.e. by liberals and Democrats -- i.e. by Barney Frank et al. But I don't believe this. Yes, it was a big piece.. but as I've said before, for a "domino effect" to occur the dominoes have to already be up on end, and in a row, and ready to fall. Which is to say, there have to be many weaknesses, flaws, and Achilles heels in the economy for a few -- or even a few million -- subprime mortgages to have the impact they have had. Among these flaws are, of course, the Social Security time bomb, Medicare, Medicaid, drug entitlements, health care (now! Just wait until Obama gets hold of it), trade imbalances, budget deficits, the national debt, the massive waste of the "war on drugs" and the "war on terror"... and, of couse, the twin overseas wars which, up until recently, were bleeding us dry faster than any other single factor. Take the last few years of the economy and subtract the war in Iraq, for instance. Does the subprime meltdown have the same devastating effect? I would be amazed if it did. Or... take the pre-existing entitlement crisis and the trade imbalances. Get them off the books. Does the subprime crisis start as big and bad a chain of events as it did? Highly unlikely. The subprime mortgage situation can be seen, perhaps, as the last straw... or, as they say in family therapy, the "presenting patient". But as far as its being the sole source of our current woes, I just can't imagine that being the case.
On the other hand, some people are starting to claim that the whole subprime mortage debacle was an ingenious "sting" operation designed to deliver a final, visible, overwhelming blow to capitalism (so-called). According to this theory, a bunch of geniuses like Barney Frank (you can already see how unlikely this scenario is) came up with the subprime mortgage idea, knowing that if they pressured, or forced, the mortgage industry to make enough of these loans, there would eventually be a tidal wave of defaults, the housing market would go flat, everyone would be angry, and "business" and "capitalism" could be blamed and thus regulated out of existence, for all intents and purposes. Well, in a sense this is the way things worked out -- and in fact they worked out even better (from the anti-capitalist perspective) because the "toxic loans" didn't just stay with the mortgage companies, they spread like a virus through the entire financial system, including overseas (Iceland, even!)... and the result is that Obama can now justify taking over any part of the system he pleases... or all of it. The reason I consider this an unanticipated consequence is that I simply don't credit these people with being that smart. Lucky, maybe... but not smart. I think what we're seeing now is more like crimes of opportunity than the reaping of a gigantic, planned harvest. But I could be wrong. The people who are really in charge might have gotten together a while back, and decided that they'd had enough of this "capitalism" thing -- or even the pseudo-capitalism that replaced it -- and that it was time to consolidate their gains and bring the world under the collectivist yoke... not the communist, or ex-communist, world this time, but the people who fought communism... the ones who thought they were "free".
There are arguments to be made for each of these models... and probably for a few others as well. But I prefer to be phenomenological for right now, and take the current crisis as a "perfect storm" of sorts, that had no single cause, but represents a convergence of all the worst in government meddling, mediocrity, greed, delusion, and political and economic opportunism. But I'll say again -- the timing could not have been better (if the whole thing had been planned from the start). The crisis starts during a Republican administration... they're "forced" to "do something" about it, or to at least start doing something, and thus give up any claim they might still have to being "pro" free enterprise and capitalism... then the Democrats take over and, well, it wasn't _our_ fault everything went to hell, but thank goodness we know exactly what to do about it -- namely to nationalize everything and print more money than already exists in the entire world. And we have "incredible confidence" that it's all going to work. Now when anything is timed that perfectly, so that no one person, or administration, has to take all the blame, you really have to think there is something behind it... and that that "something" is certainly much bigger, and more powerful, than any one measly president or administration.
But a few more thoughts about the subprime mortgage snafu. At the very least, it's being used as a scapegoat (with bipartisan blamability, even!) to keep people from focusing on areas of even greater criminality and neglect on the part of elected officials and presidential administrations. But rest assured, there's plenty enough blame to go around, when you add up all the assaults on political legitimacy and economic sanity that we have suffered over the years... and in every case, it's a matter of political expediency of the moment, and of letting the "long run" take care of itself. Of course, Keynes once commented that "in the long run, we're all dead" -- true for him maybe, but guess what, we're _living_ in the "long run" right now. The chickens are flocking home to roost -- darkening the skies -- fouling the air with their droppings. The time for putting things off has ended... the party's over (unless you work for AIG)... and the bookie ain't takin' no more bets on the cuff, thank you very much. In fact, you owe him money and he's lookin' for yez right now. That's the situation we're in, and is it our fault? (whimper, whine) Well, yeah -- it is partly, because we grew up assuming we could always live as we were used to living, no matter what. But it turns out that the "American way of life" is unsustainable -- not only from a global perspective but internally as well. Who knew that not just a few of us, but most of us, were like that bird in a gilded cage, only waiting for the day when the third world would rise up and start demanding "social justice". (And what took the Mexicans so long to realize all they had to do was wade across the Rio Grande in order to start a whole new life?) Ironically, we fought off the communists on the domestic front, and fought the (not always) Cold War internationally, imagining that once these benighted people adopted American values, peace would break out and all would be well. Well, peace did break out... at least among the big players... and guess what, now Russia, China, and India all have American values, i.e. they all want to live according to the American standard of living, to replace the self-sacrificing idealism that went along with communism (or, in India's case, the existential despair of Hinduism). "Oops!" We'd be better off if they were all still communists. But now it's too late. We set too good an example. And now they all want what we have... or what we used to have... and if they can't have it, then, by gosh, they won't let us have it either.
Is it really true that, as some have claimed, the "American experiment" could only survive as long as there were oceans between us and everyone else -- serious oceans I mean, that took weeks to cross? With borders as porous as Ted Kennedy's liver, it's hard to imagine our being able to maintain any sort of exclusivity for much longer; in fact, data on the drug trade from Latin America indicate that Elvis has already left the building and he ain't coming back. Now of course, as P.J. O'Rourke has demonstrated, it's not just a matter of natural resources or "luck" -- it's also a matter of national character... how countries become prosperous or how they don't, I mean. But let's face it -- like in everything else, there are always more losers than winners among the nations of the world, and the one resource the losers have plenty of is resentment and a determination to get their "fair share" of the "pie", no matter what it takes. So you take a flea-bitten place like Afghanistan, and rather than take us on on the field of honor they (1) sponsor the dudes who pulled off 9-11; and (2) grow 90% of the poppies that feed into our heroin problem. That's how they fight -- and it's not "dirty", or "terrorism", it's just the way small places speak power to large places. They are the mouse and we're the elephant. Our problem is that we're still considered the ones to beat... and there are hundreds of outfits out there just waiting to get into the ring with "the" superpower -- especially now that "the" superpower has developed a case of economic AIDS.
Is there a "bottom line" to all this? No -- no more than there is a bottom line when you're caught up in a tornado -- you might get let down gently, or you might wind up dashed against a very large tree. At this point, it's all process and no product. The stated agendas of our leading politicians change by the hour. Hundreds of billions are flushed down the toilet, then someone realizes it's a toilet and rushes to do something more productive with the next few hundred... like flushing it down a different toilet. It's comforting in a way -- I guess -- to finally have proof positive that our leaders really don't know any more about history, or economics, than the most ordinary citizen lounging on a park bench. They are not blessed with superior knowledge -- just with charisma and a bit of luck. And -- if you adopt my model -- they are in the unique position of seeming to be in charge, and to lead, but actually of following orders from someone else, who is unknown and invisible as far as the public is concerned. But how smart, really, is _that_ person (or persons)? Is it possible that, for once in history, no one is in control and that everyone is floundering? Warren Buffet has taken a huge hit from the economy -- so what can any of us mere mortals expect? Of course, he still has more money than anyone else on earth, but still... Yes, these are indeed interesting times, and they will be absolutely impossible to describe to anyone who is not already alive and of sufficient years to appreciate all that is going on. Impossible -- but I'm not going to give up trying.