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A Lack Of Trust

McClatchy cuts to the chase: For once, Congress heard as voters protested bailout plan

Hensarling, Cummings and lots of others had pleaded with their leaders to give them a bill they could explain easily back home. Constituents wanted Congress to act, they said, but were suspicious of what they might do.

Instead, many members found the compromise that emerged to be too complex, fueling constituents’ qualms.

Rep. Jeff Flake, R-Ariz., recalled how many people voted for hard-to-understand measures such as the 2003 Medicare prescription drug bill or 2002 legislation giving President Bush broad authority to wage war in Iraq, only to learn later that they’d signed blank checks to Bush that would come to haunt them.

“There were a lot of eyes rolling on this bailout. We’re heard this kind of thing before,” said Flake, who voted no.

It’s not that people don’t understand there are problems, nor do they think the problems should be ignored, but they want a clear explanation of the problems, and a clear explanation of what Congress is voting on before they will go along. The way this thing was sprung on Congress and the people is really suspicious. The fact that people are not being given time to read and digest the supposed solution, makes them more suspicious. They know what the Hedgemony has done in the past, and they don’t want it to happen again.

3 comments

1 John B. { 09.30.08 at 11:11 am }

“It’s not that people don’t understand there are problems, nor do they think the problems should be ignored, but they want a clear explanation of the problems, and a clear explanation of what Congress is voting on before they will go along.”

It is difficult but not impossible to offer a “clear explanation” to the American people. One segment on NPR last Friday titled “The week America’s economy almost died” does a better job of making this economic mess understandable than all of the press conferences and papers issuing from the White House and Congress, combined.

Not just Congress needs to speak to America in plain terms. So, too, does the world of economists.

I’ve been doing a great deal of reading of Bernanke’s past writings about continuing research into the Great Depression — and academic forerunners and replies to his writings. I have just about as much education as he does, though admittedly not with a concentration in macro economics, yet it has been an extremely slow and difficult slog.

Not just the math, but the English, too. Although some credit Bernanke with coining the phrase that understanding the Great Depression is the “holy grail” of macro economics, and accordingly credit him with being a breezy writer, I found his lectures, papers, and books to be turgid and painfully disjointed. They are marred by run-on sentences, abstruse jargon, maddeningly poor explanations of graphs and tables; and ‘knowing’ insider references to old and new theories and theorists which the average educated reader without a specialty in economics would have to track down and read, first, before finishing even one of Bernanke’s damn run-on sentences.

If I didn’t know better, I would say Bernanke’s (and his colleagues’) works are written specifically so that they can be understood only by a handful of like-minded macro economic specialists and never by a reasonably intelligent public. Without checking to see if there are any, it’s a good bet any of Paulson’s papers would be worse.

And yet, the central academic points Bernake has been advancing in recent years can be made clear enough. His work focuses chiefly on the causes of the Great Depression and the complications and consequences of various public policies adopted and abandoned from 1928-1938 — mostly as revealed by computer modeling of the monetary decisions of many other nations as well as the U. S.

One of his principal arguments comes down to this: that unregulated credit market behavior (also known as “the shadow economy”) had more to do with causing and prolonging the Depression than widening income disparities, industrial production decisions, interest rates, unemployment, wages, or price stability. Another is that early, prophylactic intervention to keep the exchange of commercial lending paper free and easy might have avoided, or at least mitigated and shortened, the Depression — or so the computer modeling suggests.

Now, this is not earth-shattering stuff except, perhaps, to a few economists. Futhermore, it very definitely reflects what most would characterize as a politically conservative perspective because Bernanke’s conclusions discount as contributing factors to the Depression the shocking disparities in individual wealth which even his own data show had grown rampant by 1928 (and which we know have become equally outrageous over the past three decades).

My readings, moreover, have left me with an uneasy feeling that I am watching a hammer tell me that the problem lies with nails. Some media sources have remarked on how “fortunate” we are that the current chairman of the FED happens to be an academic whose specialty is the Great Depression. I do not believe in coincidence. So, I wonder this: Would we consider ourselves equally fortunate if there were a sort of Heisenberg Uncertainty principle at work, here. Are we hearing the alarm because of the alarmist who is issuing it? Is it because Bernanke has been for much of his life so consumed with studies of the Great Depression that he is seeing and telling us (in effect) that another one might be coming?

Personally, I would have voted for the rescue bill that went down to defeat yesterday. Not because I am wholly convinced it is needed or, if needed, that it is the best remedy. And, certainly not because Bernanke and Paulson more or less demand it. What persuades me much more is that Christopher Dodd is in a far better position to assess such warnngs as Bernanke and Paulson have issued and he has a real-world track record in judging them.

That gives him more credibility in my book than anyone else in Congress or in the administration. Without a clear and convincing exposition of all of the facts so that we can judge for ourselves, we are left with the necessity of relying on the judgment of others who have earned our trust. That excludes the Administration and the Republicans in Congress whose policies created this mess in the first place.

2 LadyMin { 09.30.08 at 12:28 pm }

A Lack Of Trust …. Exactly!

I don’t believe much of what I hear from any of them. I want a clear(er) explanation of what Congress is agreeing to. And apparently other Americans do too. I’ve had more than a few friends ask me if I could explain it to them. Just telling us it needs to pass immediately, sign here, deal must be done today, makes me think of the used car salesman.

Reasonably intelligent people definitely are looking for an explanation. And are writing to their Representatives. Today When I went to the House messaging service page it was down. “The House of Representatives is currently experiencing an extraordinarily high amount of email traffic. The Write Your Representative function is therefore intermittantly available.”

If this had to happen, I’m glad it’s a few weeks before an election. Because if it weren’t, they’d already have ageed to something most of them wouldn’t have even bothered to read.

3 Bryan { 09.30.08 at 2:58 pm }

John, I have access to a real expert on the Great Depression, my Mother. She lived through it and knows at a level Bernacki can never hope to understand what happened. The records from that period are not telling the truth. Death certificates would make you believe that no one starved to death during that period, while people know damn well it happened. The newspapers down played what was going on for months, refusing to publicly admit what people could see for themselves. You can’t get a clear picture of what happened from the records, because the records are fraudulent.

The people at the top have been down playing the reality that things have been in the tank since the Fall of 2007, and the foreclosures should have been anticipated and planned for, not swept under the rug. They can’t deal effectively with the housing meltdown because they can’t access individual mortgages. They have bundled the bad among the good to hide the bad, and have used absurd mathematical models to justify pricing.

You end up with two related but separate crises – the real world housing market problems, and the fantasy world bond and derivative meltdown. First you deal with the real world problem, then you start investigating the fantasy problem.

Wall Street borrowed a lot of money to bet that housing prices would never fall, and they lost the bet. First you make sure they can never do that again, then you start cleaning up the mess. If you start cleaning up the mess first, Wall Street will try to profit from it.

LadyMin, in four days they went from “fundamentally sound” to a financial apocalypse, and that means someone is lying to us.