Be Thankful for Small Blessings: Bush Silent on Nation's Economic 9/11

A BUZZFLASH NEWS ANALYSIS
by Christine Bowman

The good news: Bush sits this one out. The bad news: GOP finance mess could take years to clean up.

George W. Bush is America's MBA president, but I give him credit, this once, for sidelining himself at a time of national peril.  If George Bush doesn't know what to make of the immense disaster that has gripped the American economy, he is right to step aside and let others decide how to contain or respond to the problems.

Chris Matthews on Hardball correctly pointed out last night that, normally, a  U.S. president would go to the podium, address the American people, and lead the country forward in a discouraging time such as this. Matthews lashed out at the nearest Republican at hand, his guest, Rep. Eric Cantor (R-VA), as a typical GOP enabler of deregulation and advocate of a failed approach.  Matthews was venting, but he was essentially right.

Bloomberg News has been critical of President Bush, too. 

The president, who hasn't held a press conference in more than two months, hasn't taken questions about the crisis and canceled plans to issue a statement after meeting Sept. 16 with advisers, including Paulson and Bernanke. 

Bloomberg goes on to quote J.D. Foster, former chief economist for the White House Office of Management and Budget under Bush, who said in the president's defense: "It's critical for the administration to speak with one voice during a period of economic turmoil and that voice should be Paulson's,'' Foster said. "The president's job is to let the Treasury secretary do his job.''

Sometimes, the less said, the better. This morning, Bush said very little but did comment.

Lacking a cogent explanation to offer the public from the White House, economic writers at The Wall Street Journal have taken a stab at explaining what's going on in the markets. Here's part of their helpful synopsis of where things stand.

The U.S. financial system resembles a patient in intensive care. The body is trying to fight off a disease that is spreading, and as it does so, the body convulses, settles for a time and then convulses again. The illness seems to be overwhelming the self-healing tendencies of markets. The doctors in charge are resorting to ever-more invasive treatment, and are now experimenting with remedies that have never before been applied. Fed Chairman Bernanke and Treasury Secretary Henry Paulson, walking into a hastily arranged meeting with congressional leaders Tuesday night to brief them on the government's unprecedented rescue of AIG, looked like exhausted surgeons delivering grim news to the family. ...

Fed and Treasury officials have identified the disease. It's called deleveraging, or the unwinding of debt. ...

Financial institutions and others need to fess up to their mistakes by selling or writing down the value of distressed assets they bought with borrowed money. They need to pay off debt. Finally, they need to rebuild their capital cushions, which have been eroded by losses on those distressed assets.

That's hard to do, as anyone who has ever struggled with credit card debt also knows. The best case scenario seems to be "a couple years of mild recession or painfully slow economy growth," say Goldman Sachs analysts.

Meanwhile, Massachusetts Democrat Barney Frank, chairman of the House Financial Services Committee, has a proposal in the works that might help some. It's an update on a program that helped clean up the early 90s S&L crisis of Bush 41's administration.

A BUZZFLASH NEWS ANALYSIS

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