Technically speaking, this week did not begin with President George W. Bush facing the press. It began last night with ample time for the news to appear on the front page of this morning's San Francisco Chronicle and to occupy pride of place on most morning radio news reports. Of course, in this era of downsized newspaper staffs depicted so dramatically on The Wire, the Chronicle had to rely on the Washington Post for its front-page report:
The Federal Reserve took dramatic action on multiple fronts Sunday night to avert a crisis of the global financial system, backing the acquisition of wounded investment firm Bear Stearns and increasing the flow of money to other banks squeezed for credit.
After a weekend of negotiations in New York and Washington, the central bank undertook a broad effort to prevent key financial players from failing, including the unprecedented offer of short-term loans to investment banks and an unexpected cut in a special bank interest rate.
As part of the deal, JPMorgan Chase, a major Wall Street bank, will buy Bear Stearns for a bargain-basement price, paying $236.2 million - roughly 1 percent of what the investment bank was worth just 16 days ago - for a venerable institution that still plays a central role in executing financial transactions.
The President then met with Treasury Secretary Henry Paulson and other senior economic advisers early this morning, after which he reported on this meeting to the press. As usual, it is useful to examine the language behind such a briefing, beginning with quotes provided by Ben Feller in his report for the Associated Press. Let's begin with the quote that initiates Feller's story:
One thing is for certain, we're in challenging times. But another thing is for certain: We've taken strong, decisive action.
The first thing that stands out is that the emphasis on optimism is not longer front and center, although it is unclear whether or not Bush appreciates that a phrase like "challenging times" could constitute one translation of an ancient Chinese curse. More important, however, is that Bush is now endorsing the first stage of the approach that President Franklin Roosevelt took in the face of the Great Depression; as Roosevelt put it, "take a method and try it." As I like to put it, something is always better than nothing. My concern, however, is that Bush may ignore the second stage of Roosevelt's advice, which, if ignored, practically invalidates the first part: "It if fails, admit it frankly and try another." Bush has not been one to admit failure, frankly or otherwise; and this is no time for denial.
On the other hand the decisions to which Bush has held most steadfastly have come from the "wisdom" of his faith-based heart. Those decisions have, for the most part, been concerned with the Manichaean dualism that reduces all actions to a conflict between good and evil; and this may be a situation in which his heart as not been able to inform him about which of the many players are on which side. Thus, the "strong, decisive action" he is endorsing comes not from his heart but from the Federal Reserve, presumably through their interactions with Treasury Secretary Paulson; and this point was subsequently emphasized in remarks by White House Press Secretary Dana Perino. These may then be the agents upon which we shall have to depend for the wisdom to recognize failure, the strength to admit it, and the cognitive skills to come up with another method.
Once we get beyond these basic precepts, the rest of Bush's remarks amount to a "virtual gingerbread." When he says that "our financial institutions are strong," it is hard to imagine that he has given much thought to what constitutes the strength of a financial institution. These are the words of a parent trying to comfort scared children, a parent who lacks the gumption to answer a painful question with a hard truth that can be softened only by the strength of hope (as those of us saw last night on John Adams, when Abigail Adams had to comfort her children frightened by the sound of guns that were not particular distant). Similarly, Bush may not have been in error when he said that "our capital markets are functioning efficiently and effectively" (probably echoing his advisors); but there is no end of dispute over the mathematical models for how markets function at all, let alone what those models say about efficiency and effectiveness.
Bush's greatest slip (and I suspect that any reporters versed in economic history, if they still exist, will jump all over it) came towards the end of Feller's report:
In the long run, our economy is going to be fine.
I would be surprised if anyone with even a smattering of education in economics would have been unaware of one of the most notorious comments by John Maynard Keynes:
In the long run, we're all dead.
Keynes understood the need for striking the right balance between short-term and long-term problem solving. Of course, as John Kenneth Galbraith pointed out in his man-in-the-street book on economics, The Age of Uncertainty, Keynes relationship with Roosevelt was not particularly productive:
Each man was puzzled by the face-to-face encounter. The President thought Keynes some kind of "a mathematician rather than a political economist." Keynes was depressed; he had "supposed the President was more literate, economically speaking."
This reminds me of Donald Francis Tovey's account of a meeting between Robert Schumann and Richard Wagner. Schumann thought Wager talked too much, and Wagner thought Schumann had nothing to say! The BBC team that produced the televised version of The Age of Uncertainty (which was also aired on PBS) had their own musical take on Roosevelt and Keynes: When Galbraith discussed this meeting, they selected, for background music, the gunfight scene from Aaron Copland's "Billy the Kid" ballet!
Nevertheless, those who are feeling most of the pain of the current economic crisis are unlikely to care very much about the wisdom of either Roosevelt or Keynes. They are still the "scared children" that matter and could have done with a bit more of the backbone that made Abigail Adams so memorable (and such an excellent character for dramatization). All Bush really did was leave the scary stuff in the hands of Perino:
She also said the administration was taking action to help individual homeowners suffering from higher mortgage defaults, and that there is "a responsibility on the part of the media to really explain" that assistance.
It is unclear just what was meant by that snipe. As I pointed out at the end of last week, the concrete actions we have observed (which the media have dutifully reported) have been blatantly concerned more with the "suffering" of financial institutions than with any "individual homeowners." If those homeowners are to take any comfort at all, it will come from actions by the Congress and only if the President does not apply his veto power to those actions!