Descend into the Maelstrom

I’m not going to pretend to be an expert on economics, but I do know that the American economy, and by association world economy, are in the midst of a history-bending crash. To boot, we are knee-deep in a contentious and ugly election cycle for the presidency and also Congress. Put the two together, and America is suffering from all that is bad about America: paralysis in Washington, skullduggery on Wall Street, and an American citizenry on Main Street that has no idea what is going on. From bankers to economists to politicians, nobody saw this coming despite what some of them might be claiming now, and nobody has convincingly provided any answers about where this thing is heading.

With an absence of reliable information available from any quarter, we must resort to analyzing the factors at play in the last few whirlwind weeks of finger-pointing and hand-wringing. I have been unable to find a simple breakdown anywhere else. In my opinion, this complex web of individual tugs-o-war are now actively underway and will shape the outcome:

To Bail or Not to Bail. That would be the question. The $700 billion dollar question, to be exact. Many mainstream politicians, including Bush and the duo of potential successors, McCain, and Obama all seem to be for it with perhaps slight modifications. Its authors, including Bush appointees Secretary Paulson and Fed Chairman Bernanke claim that the economy would suffer an unmitigated slide without the bailout, and the infusion of cash would be good for all Americans despite the unprecedented outlay of taxpayer dollars. They argue a doomsday scenario if we don’t make bail. But- and here is the terrifying part- the opposing arguments are legion, and sound just as reasonable, depending on which smart economist you talk to. The slide, which depends largely on an unquantifiable concept known as “confidence,” may be uncontrollable even with a bailout- like a Band-aid on a broken leg. Plus, is it the government’s role to save failing companies in a free-market society- therefore socializing the dumb risks that Wall Street takes? Most business owners who do a lousy job are simply allowed to fail across the country and around the capitalist world. That’s part of the definition of capitalism, something we’ve committed to centuries ago, and ostensibly, one of the core democratic values we are trying to protect and spread by fighting to the death in Iraq and Afghanistan. Finally, what’s in it for the common folk who are getting foreclosed out of their homes, the real losers of the day? Why does Wall Street get a bailout while they don’t? This leads to the next tug-o-war.

Constituents vs. Corporate Patrons. We all know that corporations fund both major parties and their candidates. On the other hand, politicians are elected by the people, and must heed the angry phone calls and emails from constituents. Congressmen are being torn asunder by an epic battle between the two forces. I’m sure most corporate donors are begging their buddies in Congress to vote for the bailout, while the citizenry smells yet another corrupt attempt to redistribute their money to benefit companies that do not deserve it. This has caused the impasse we are at right now, epitomized by:

Republicans Vs. Republicans. President Bush has been neutered by his own wretched performance for eight years, and with his popularity at a dismal low, this is not a good time for him to have to attempt to ram through unbelievably contentious legislation, even with vigorous gambits by Secretary Paulson and the presidential candidates. The House Republicans did not bite on the bailout vote, despite McCain’s support, because of Bush’s support, and that’s partly why the bill failed this week. With the election just weeks away, some Congressmen undoubtedly calculated that their jobs may hinge on this monumental vote. A smaller group may be against the bill on principle, under the conservative umbrella of free markets, deregulation, lower spending. Which is also worth discussing:

Capitalism Vs. Socialism. The bailout high jinks are part of a wider debate in America: what kind of nation are we? America exists in a bipolar, piecemeal twilight zone somewhere between the small-government capitalist standard-bearer of the world, and a nanny state who meddles in everything. While we promote trade and the free movement of labor and capital, our government is also full of folks who provide insane industry subsidies and tariffs; run housing projects, Medicaid, and Social Security; all the while protecting you by spying on your emails and forcing tobacco firms to warn you that the profit-inducing product inside the box will kill you. At some point, something has to give. Are we going to admit to nanny socialism by passing this bill or aren’t we?

Partisanship Vs. Bipartisanship. One of the highlights of the campaign season/ financial crisis cocktail has been McCain’s bizarre attempt to suspend his campaign and postpone the first presidential debate. Here comes this presidential candidate who admits to not being an economic expert, but believes he must drop the presidential campaign to come together with Obama to solve the crisis and rescue America. Except… he forgot to tell Obama about his Amazing Technicolor Bipartisan Plan. Obama for his part, raring for the debate that would likely help him push ahead of McCain in the polls, asked that he and McCain not inject too much partisan presidential politics into the crisis. But both did just that: McCain’s desperate ploy was strictly political. Obama and McCain then both proceeded to sidestep multiple questions from Lehrer about whether they supported the bill or not in the first debate. The most important question of the election cycle, and both of them refused to give a straight answer. Bipartisanship does not exist; it’s a cruel joke:

Republicans vs. Democrats. As the parties joust for position, it has been clear that the crisis, and the failure of the bailout to pass muster are both the fault of the other party, depending on which politician you ask. Democrats can blame Bush and the Republican Congress for sleeping at the wheel for much of the last eight years, and in fact many of them see the faltering economy as a boon to their chances to get re-elected in November. Democrats could also rightly claim that Republicans hijacked the bill. Meanwhile the Republicans are quick to blame Pelosi, Reid, Obama, or even Bill Clinton for all that taxing and spending. Anyone, anyone but themselves.

VP Gaffe Vs. VP Gaffe. Finally, we are approaching the long-awaited VP debate between Sarah Palin and Joe Biden, and all the campaigning before and after by these two on the economy. You could bill it as the All-America Alaska Ignoramus vs. Joey Foot-en-Mouth. Palin has no idea what a recession or a depression are, and has already predicted that we could be headed for a depression! That’s what pit bulls with lipstick are supposed to do: scare you (more so than a pit bull without lipstick would do), whether it’s about the Russians overtaking Alaska, Iranians terrorizing us and our allies, or another Great Depression. Have fear, and vote for Mommy. Meanwhile, Biden will give extremely eloquent and passionate remarks about how to solve the crisis, but he’s likely to draw on lessons from the wrong decade, using presidents from the wrong eras of history. At the very least, this should be highly entertaining, in a reality TV sort of way.

If any of this makes you feel better about this unquantifiable crisis we seem to be going through, I have failed.