[Commentary on the economic crisis abounds. This article is one of the few that describes the devastated, nearly comical, body language of the players. It also begins with this prophetic quotation-jlt]
| Society has played out its stake; it is check-mated. Young men have no hope. Adults stand like day laborers idle in the streets. None calleth us to labor. The old wear no crown of warm life on their gray hairs. The present generation is bankrupt of principles and hope, as of property…. Behold the boasted world has come to nothing. Prudence itself is at her wits’ end. Ralph Waldo Emerson Journals, 1837 |
THE financial dam burst on September 13, 2008. A flood of capital swept out of the stock markets and went into government-backed bank accounts, where they remain, pooled up and inert. These bank accounts are the equivalent of hiding money in one’s mattress. They are shelters from the turbulence of the financial storms. Governments from Japan to the United States struggled to take control over a vast continent of economic life that they had previously given up to the bandits of profit. To re-establish sovereignty over these regions has not been easy, and it has aged many of those who are trying to lead the charge.
| No one knows the exact size of the fictitious sector, but some estimate that the credit default swap market alone is about $62 trillion. |
In Washington, D.C., President George W. Bush has lost his swagger. Impetuous in front of the press, he now looks grave, grizzled even. Beside him, the members of his Working Group on Financial Markets look ashen-faced, stooped. Sheila Bair, whom Forbes called the second most powerful woman in the world (after German Chancellor Angela Merkel), runs the Federal Deposit Insurance Corporation. A few years ago, she wrote two books for children on sound money management; now she is in the position to act on her own advice. Beside her is Ben Bernanke, Chairman of the Federal Reserve and a former Princeton University professor of Economics (his colleague, Paul Krugman, won the Noble memorial prize in Economics this year). Towering above them is the U.S. Treasury Secretary, the dour-faced Henry Paulson, who studied alongside Bernanke at Harvard before building a fortune at the helm of Goldman Sachs.
| ...the Bush team saw this as a solvency crisis created by bad loans made by irresponsible bankers and not as a wider problem of debt in American society. |
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