I've been reading the many good diaries on here about developing talking-points and themes to use to persuade undecided voters to swing to Obama.
The basic thrust of the talking-points diaries is to try to work out an uncomplicated, powerful narrative centered on the listener's major concerns and issues. Great advice, and I wish I could add to it, but I can't. This is not a diary about finding uncomplicated narratives. This is a diary about a much more complex and, ultimately, terrifying question: are we as a nation sane?
We're going to soon find out, and it's not yet crystal clear what the answer will be, even if Obama is elected. This election is only Part A of the two-part sanity test facing us. If we pass Part A, we'll face Part B of our sanity test after Obama takes office and starts working to clean up the mess that has been wrought over the last 8 years (38, if you really want to get technical about it).
For a little background on what drove my concerns to write this diary, take a look at this NYT article and join me over the fold.
The linked article reports that Fed chair Ben Bernanke and Treasury Secretary Poulson made an urgent, late-evening visit to Congress on Thursday and spoke in a conference room to assembled leadership of both houses of Congress and both parties about the current financial crisis and their proposal for dealing with it. What makes the article so chilling is that it states Congressmembers who were present "were stunned into silence" and when they heard it "you gulped" (Sen. Dodd). As Sen. Schumer states in the article, "[h]istory was sort of hanging over it, like this was a moment." But no one present has so far been willing to reveal the details of the dooms-day scenario that Bernanke and Poulson sketched out for them.
Naturally, I began to wonder about what exactly Bernanke and Poulson might have said. It's not hard to conjecture, especially when you read Sen. Dodd say they were told “that we’re literally maybe days away from a complete meltdown of our financial system, with all the implications here at home and globally.”
A few details from the article give more clues:
When Mr. Schumer described the meeting as “somber,” Mr. Dodd cut in. “Somber doesn’t begin to justify the words,” he said. “We have never heard language like this.”
“What you heard last evening,” he added, “is one of those rare moments, certainly rare in my experience here, is Democrats and Republicans deciding we need to work together quickly.”
Although Mr. Schumer, Mr. Dodd and other participants declined to repeat precisely what they were told by Mr. Bernanke and Mr. Paulson, they said the two men described the financial system as effectively bound in a knot that was being pulled tighter and tighter by the day.
“You have the credit lines in America, which are the lifeblood of the economy, frozen.” Mr. Schumer said. “That hasn’t happened before. It’s a brave new world. You are in uncharted territory, but the one thing you do know is you can’t leave them frozen or the economy will just head south at a rapid rate.”
As he spoke, Mr. Schumer swooped his hand, to make the gesture of a plummeting bird. “You know we’d be lucky ...” he said as his voice trailed off. “Well, I’ll leave it at that.”
Wow. "We'd be lucky ..." At this point, I was almost screaming at Schumer, "we'd be lucky to what?!"
Here's what I think Schumer and the others were told, more or less: in short order, US banks, large and small, will start failing en masse, locking out depositors from their funds and quickly overwhelming the paltry reserves of the FDIC. At that point, the financial crisis doesn't just wipe out balance sheets, it destroys the money economy and very rapidly creates a civil disorder problem. Depending on how melodramatic and Hollywoodish Bernanke and Paulson are, the story could have continued in gruesome detail -- probably unnecessarily. Everyone in the room probably understood at a gut level the range of possible scenarios, even if no one spelled them out.
A scenario like this -- something I've voiced fears about for years, even at the expense of being called a doom-sayer -- has only one reasonable way out, which is government take-over of the major economic institutions and, in the more extreme scenarios, printing presses working over-time, with containers of cash being almost literally dropped off at street corners to get cash money into the hands of the public. A tale with these implications certainly would have "history hanging over it," in Sen. Schumer's words.
So here's where the sanity question comes in.
It seems obvious how we got here. Even John McCain is now trying to back-track on his deregulation record and assert that Obama -- the formerly "inexperienced" Senator with no major accomplishments to his record -- got us here almost single-handedly by helping loosen the regulatory bonds that allowed the financial sector to turn its wildest fantasies of avarice into complex financial and investment instruments that are now destroying the system from the inside-out. (We need more economists and investment bankers who have read Karl Polanyi's "The Great Transformation," which lays out precisely why an unfettered capitalist economy will eat itself, quite unintentionally.)
With the titans of Wall Street now clamoring for government rescues and bail-outs (recently converted advocates of socialism ... for the rich), one would like to think that they have learned a permanent lesson about the benefits of government regulation and its role in keeping the economy in bounds and protected from the short-sightedness of its participants, especially the richest among them. But I'm not so sure.
True, we're seeing a lot of movement toward Obama right now, most of it probably due to economic events and the impending sense of crisis. And I can even confidently state that Obama will most likely win the election. I think we'll pass Part A of the sanity test.
I'm still not sure if we'll pass Part B. Assuming current efforts to rescue the financial sector succeed in calming things down for a bit, the real test will come when Obama and Congress start to enact reforms that seriously curtail the financial sector's freedom of movement. I have a sneaking suspicion that today's converts to regulation and government intervention will forget the lesson of history hanging over us right now and revert back to standard pig-headed devotion to "free market" principles.
I've known someone who survived a near-death experience and was inspired to completely change his life in radical, profoundly positive ways. I've known one person, an alcholic, who miraculously walked away unscathed from a fiery solo car crash he caused while DWI and went out drinking the next night to celebrate. Which one are we as a nation?