Monday, October 27, 2008

I Want It All, and I Want It Now

The current financial tsunami had its roots, most people agree, in the overleveraging of the American consumers, who bought houses they couldn’t afford, vacation condos they couldn’t afford, and a lifestyle that could be supported only as long as banks flooded the market with easy credit. People may disagree on who is mostly to blame- greedy banks or greedy (or dumb) borrowers, but everyone agrees that consumers were way over their heads and that a good bucket of cold water is long overdue.

It is disheartening, therefore, to see a major credit-card issuer (Chase) advertising the joys of living high on plastic to the strains of a hard-driving jingle whose lyrics go like this:

I want it all
I want it all
And I want it now!

What are these guys thinking? Don’t they know what’s going on in the land? Where are those indignant Congressional committees, the committees that posture before the TV cameras and huff and puff about Fannie and Freddie and regulators and golden parachutes and overpaid executives? Do they watch television? Do they know that people are still being urged to borrow, borrow, borrow? I still get solicitations from credit-card issuers, some of them with checks that have my name printed on them. I should rush right out and cash these checks, they tell me, even though they don’t have the foggiest idea of my financial situation.

Today a press release announced that the Federal Government will buy $3.55 billion worth of stock plus warrants in Capital One Financial, one of the most aggressive of the credit-card pitchmen. (“What’s in your wallet?”) The Government will not buy stock in fast-food restaurants or semiconductor makers or struggling software companies, most of whom need the help, but it will buy stock in Capital One, which may use the $3.55 billion for more TV ads and more direct mailers to lure more pigeons to take out credit cards they shouldn’t have.

People were so burned up the first time the bail-out was floated that their anger caused the House to defeat the bill. A few days later, Hank Paulson and Ben Bernanke frightened Congress into passing the legislation. Hank and Ben, the Great Facilitators.
We certainly don’t want to kill the credit-card economy, do we? Is this a great country or what?

Tuesday, October 21, 2008

I Like Ike

People tend to look back, not in anger, but in wistfulness. Nostalgia is a powerful drug, and it filters out the bad times and highlights the good. Our high-school years tend to be more sweet than bitter, because those were the years of early discovery, of awakening to life’s possibilities.

But a reading of history, when you are older, often throws a bucket of cold water on those memories. The sixties, no matter what your personal experiences, must be counted as a bad time in America (and, for that matter, in Europe). It was a decade of assassinations and pointless wars and social unrest. The forties, romanticized today by the strains of Vera Lynn singing “We’ll Meet Again,” saw unspeakable horror. The decade of the thirties was also elevated by its music. Depression? Not if you listen to the score of 42d Street. We’re in the money, ready to shuffle off to Buffalo.

But the fifties – ah, there was a time to savor. With Dwight Eisenhower looking over us, the Soviet Union a threat that had yet to materialize, Japan devastated and China still in its dark ages, we had nothing to do but enjoy life and a monopoly of economic power. The colleges were full of students (the GI bill), television offered Playhouse 90 and Sid Caesar (nothing that would offend your wife or mother), and Ted Williams and Warren Spahn delighted Boston baseball fans. There was a war in Korea, but our cause was unambiguous (the North invaded the South), and there were no protests. The fifties were not unalloyed bliss (what is?), but looking back over the sweep of the last seven-plus decades, the fifties stand out as a sort of golden age in the United States.

If you’ve been reading these blogs for a while, you know that one of my passions centers on the American musical theater, and so it must be mentioned that most aficionados believe that the fifties constituted the golden age of musicals. Guys and Dolls led the parade, followed down Broadway by The King and I, The Pajama Game, Fanny, Silk Stockings, Damn Yankees, My Fair Lady, The Most Happy Fella, West Side Story, The Music Man, The Sound of Music, and so many other evergreen shows.

Could we have another decade like it? No; it was sui generis, bookcased by a unique set of circumstances – a world war behind, Vietnam to come. But I keep coming back to the reassuring presence of Dwight Eisenhower in the White House. He is usually not numbered among the great presidents, but maybe he should be. Is there such a reassuring presence waiting in the wings today? The only person I can think of is Colin Powell. He alone has the temperament, the gravitas, the presence to be another Eisenhower, but he has declined to run.

It will be interesting to see how the country shakes out after the elections. The atmosphere is so toxic as to make national unity difficult, and a deepening recession may make it impossible. The new president will have to reach across party lines in the composition of his cabinet and in the formation of his policies – immediately and dramatically. Anything less will guarantee four years of the kind of hate-filled politics we never knew back in the good old days.

Wednesday, October 15, 2008

None of the Above

I have never sat out a presidential election, not since I started voting, but this year’s selection leaves me cold. I will vote, but probably not for the top of the ticket. The problems I have with both candidates are just too serious.

For McCain: He keeps talking about “victory” in Iraq and Afghanistan, as if victory in any reasonable sense of the word was possible. The Aghans (with our aid) were able to drive the Russians out some years ago. This time it’s different, said one of the prominent neocons in an interview, because the Aghans didn’t like the Russians, but they like us(!). If McCain really intends to hang in there until we defeat the insurgents, our children and grandchildren will still be fighting in that God-forsaken place decades hence.

If that weren’t enough, there’s Sarah Palin. If placing Sarah the so-called heartbeat away from the presidency was an example of McCain’s judgment, this alone should disqualify him. Yes, she had momentary pop-star quality, but so what? We’re talking about the presidency here, not a People magazine celebrity. She can’t do much harm in Wasilla, but she can do a whole lot of harm in Washington.

Finally, I fear that McCain sees himself as a warrior, and I worry that the same hawks who brought us Iraq will counsel him to bomb or invade Iran and North Korea. We’ve tried war; it’s time to try diplomacy.

Now to Obama: He endlessly tells us that he will lower taxes for 95 percent of us, which, if people vote their pocketbooks, should guarantee a landslide. But what about the other five percent? Let’s say that the top one or two percent – the Warren Buffets and Bill Gateses – don’t care, because they’re tax-proof. Question: How many of the next three percentiles are the very people we need to dig us out of this recession? I am talking about the managers and accountants and venture capitalists whose brains and talents we so desperately need right now? I am also talking about the doctors Obama will need to implement his ambitious expansion of health care services and the scientists and engineers he will need in order to help us invent our way to energy independence.

Let's say you are flying in a jetliner that is trying to land during a storm at night, with one engine shut down because of an oil leak. Is this the time you want to start arguing that pilots are overpaid? Or do you want the very best, most overpaid pilot you can find at the controls? Right now the economy is trying to land in a storm, and it has sprung a leak.

Notwithstanding Wall Street's recent excesses, we are still a meritocracy, and the Obama tax plan takes dead aim at that notion, not just through the higher tax rates but through means-testing, vanishing exemptions and the like. If it were just another transparent ploy to win votes it would be understandable, but I am afraid Obama’s convictions are as sincere as they are misguided. If only he had spent a few years running a small company....

Obama’s protectionism (rewarding companies that keep jobs in the U.S.) is hard to understand in one whose background should engender a world view. His is a foolish plan, because it would lead to retaliation. Borrowing two billion dollars a day from overseas lenders, we obviously need to cultivate relations with China, Russia, India, etc., not antagonize them. In this respect, McCain and Obama are equally culpable.

We have had flawed candidates and flawed presidents before, and we have always muddled through, as we will this time. But I do fear the interregnum between Election Day and the January inauguration. Polarization is high in the land, and the world situation is a tinderbox. The opportunity for mischief-makers, domestic or foreign, has never been higher.

Monday, October 06, 2008

Sea Change

The ocean looks different now. The sun is lower, so that its light bounces off the water and right into your eyes as you walk along the beach, as I just did. I walked a couple of miles on the hard sand (the tide was low), sharing the morning with only a few seagulls. There was hardly a cloud to be seen, the blue sky and the bluer water creating a dazzling seascape.

The scene makes it easy to forget the turbulence that besets the country these days. The economy has begun to weather its own sea change, the most pronounced since World War 2. The ship of state was foundering in 1968, but it was nothing like this. If you are as old as I am, you may remember 1968 as the year of assassinations and Kent State and the Democratic convention in Chicago. It was a rough time, but with one crucial difference: The economy was in good shape in 1968. I know because in that year I walked away from a good job with an established company to join a small start-up. I wouldn’t be so brave in today’s economy. Viet Nam was an unpopular war, as Iraq is today, but the moral angst of voters was not matched by economic angst, and Hubert Humphrey was not willing to break sharply with his President on the War, so Nixon won.

Today, people are fed up with the mid-East war and they are also losing their jobs and their homes and their retirement nest-eggs. That’s a poisonous combination for the incumbent party, and Senator McCain has abandoned all pretense of promoting his own programs or philosophy and is directing his entire advertising budget to a single theme: his opponent is not to be trusted.

It’s a doubtful theme, but what else does he have? Like Hubert Humphrey, he cannot declare the war a bad idea from the get-go. He can no longer insist that the fundamentals of the economy are sound, because events have given free-market capitalism a bad name.

Obama is clearly ahead in the polls (if one can trust them), and experts, including some Republicans, are starting to speculate on an Obama landslide. The McCain partisans hope for a close victory; no one is predicting a McCain runaway. Indeed, some Republicans see a silver lining here: Things are so bad that the winner is doomed to failure, setting the stage for a Republican comeback in 2012. You take your solace where you find it.

Whoever wins will have to deal with an economic sea change sweeping over the nation. Times will be tough, much tougher than either candidate dares describe. We have been living beyond our means for years, and learning to live within our means will force a painful readjustment. The credit cards will have to be cut up and thrown in the garbage.