We have shared a brief sense of relief that the election is over. This relief has yielded to a yet deeper level of anxiety about the unfolding financial crisis. At each descending level it becomes more apparent that the clear distinction between politics and economics we long for, simply does not exist.
In the spirit of Midwestern candor, I offer that almost none of the people I voted for won. God knows I didn’t vote McCain based on the Republican Party’s record on economic issues. As utterly incompetent and even corrupt as many Republicans seem, I am thoroughly convinced that socialist medicine will be worse than the economic disease we are afflicted with. I keep searching for some form of economic thought and analysis which transcends the stale deadlock between hippy socialism and cowboy capitalism. Neither of these categories have much to do with the political economy we really inhabit.
As I write, Citicorp has negotiated with Federal agencies about the next round of capital needed for solvency. One can only wonder how deep the hole in their balance sheet really is. It is hard to draw a meaningful distinction between Fannie, Freddie and Citicorp. Fannie and Freddie are public institutions pretending to be private and Citicorp is a private institution pretending to be public. They are all just huge institutions hooked to a Federal IV. The only thing we know is that all this monkey business was worth more than $100,000,000 each to Franklin Raines and Sandy Weil.
Shortly before the election, an economist I know was asked what he would do first if he were elected President. He responded, “I would demand a recount.” The only two motivations for seeking public office are megalomania and a profound desire to serve. I pray for the latter.
Obama’s moves since the election have reinforced the view that he will be more centrist in his economic policy than his rhetoric and record would suggest. He is a very intelligent, disciplined man who knows his long-term objectives. I admire his focus, but I don’t share his objectives. The economy must be stable for Obama to accomplish his deeper objectives. He will not frivolously spend political capital on economic extremism. This is good news for those of you concerned about your financial portfolio. This is bad news for those of us concerned about more important matters.