Why Oh Why Can't We Have a Better President?

George W. Bush's level of understanding of the financial crisis:

Houston Political Blog: What did Bush say at Olson Fundraiser?: The President's folks didn't let the press in, but we got some exclusive video of POTUS talking up a storm at Pete Olson's fundraiser on July 18th....

Wall Street got drunk, it got drunk, (it’s one of the reasons I asked you to turn off your tv cameras.) It got drunk and now it’s got a hangover.  The question is how long will it sober up, and not try to do all these fancy financial instruments...

http://abclocal.go.com/ktrk/media?id=6282405

Comments

[bakho]

Is there a 12 Step program?

[jerry]

"Is there a 12 Step program?"

George didn't need a 12 Step program. Doesn't believe in it. He stopped cold turkey. Presumably, if that was good enough for him, he would feel that would be good enough for Wall Street.

The drunk and needs to sober up metaphor extends to how this is all nothing serious. Just a bit of a party. And presumably to the group of financial darwinists who think that recession/depression is a good thing in how it helps weed out the bad genes.

So I would be very "surprised" to see George W. agree to bail anyone on Wall Street out.

On the other hand, I have to say, with the few people I know who work on Wall Street or financial companies, that the drunk metaphor has a ring of accuracy to it. It was Other People's Money, and they were math geniuses, and they could do no wrong and their ability to whip out derivatives and models certainly was much more useful to society than say, working in engineering, and so all their speculation and derivatives amply justified their enormous paychecks. And in that sense, yeah, I actually think people being drunk on OPM is pretty accurate.

I don't like bailouts, but I think that the combination of bailout and jailtime and financial ruin for the owners is darn powerful.

[jerry]

There's a lot to be said for floggings and the stockades for incompetent regulators, and probably the drafting of their children into the army if the regulators are corrupt. (But not the front line troops, say just on the logistics supply lines.)

[prostratedragon]

"But not the front line troops, say just on the logistics supply lines."

Though these be but offspring, I beg to differ. My father was a logistics sgt. ---the human Oracle they used to use when miles of real index cards had to be kept updated. He'd have been hard-put to be able to use most of the criminal legacy crowd, I suspect. Let 'em scrub pots.

[Phil P]

This post surprises me. When I saw the clip I thought, for once he(GWB)said something intelligent.

[save_the_rustbelt]

I've been advocating the hangover theory for a couple of years now.

The only difference is that George was buying the booze on the government's credit card (deficit spending) and is therefore responsible for much of the excess.

[Matt]

I thought the President's comment was on the mark. (And I yield to no one in my disdain for him.) The broader issue, though, is that Wall Street always wants to get drunk. (I've been working in and around it for two decades.) The problem was that the bartender didn't cut the Street off.

[Michael Turner]

"And in that sense, yeah, I actually think people being drunk on OPM is pretty accurate."

Problem is, it's always OPM anyway, all the time, so what was different this time? Unlike Jerry (and apparently GWB), I have nothing against intelligent, highly skilled people designing complex financial instruments for other people's investments, so long as it doesn't veer off into fraud or fantasy or both. It's well known that it can. That's why we're supposed to have sharp financial market regulators, wielding policies with real teeth. Which is pretty much what we DIDN'T have during most of the Reign of Dubya.

Same metaphor, more honest Dubya: "Time was, they had bartenders who would refuse a guy a drink if he was going over the line, who would take his car keys and find a designated driver if he wasn't fit to get behind the wheel. My mistake was not hiring bartenders like that for this party -- such as it was."

It didn't help that this dry drunk had an enabler like Greenspan, who claims he didn't recognize the bubble in housing until very late in the game. (And then we got the "not my job!" excuse. "Yessir, he was driving drunk, but I was just in the back seat, giving driving directions .... I couldn't smell his breath, and besides, there was nothing I could have done anyway....")

[vtcodger]

***This post surprises me. When I saw the clip I thought, for once he(GWB)said something intelligent.*** Indeed. He may not be brilliantly insightful, but this is one of those rare occasions when GWB seems to have a grip, however hazy, on reality. We should be congratulating him on (finally) getting at least one thing more or less right.

[Bill C]

So, Wall Street needs to find Jesus and marry a librarian?

[Tazistan Jen]

"The question is how long will it sober up"

This doesn't even make sense. Does he mean how long will it take to sober up? How long will it stay sober? Something else?

Anyway, if Wall Street was drunk, the Bush administration was buying rounds.

[David]

"I have nothing against intelligent, highly skilled people designing complex financial instruments for other people's investments, so long as it doesn't veer off into fraud or fantasy or both."

People need to take responsibility for their own investments. If someone invests in a product they don't understand and it turns out badly, that's their own fault.

It's common sense that high return and low risks don't go together well. So when people invest in the hopes of "beating the market" and they lose, that's the risk they took. Just because they go after the providers instead of the government to demand a bailout doesn't make it any more justified.

[Michael Turner]

Problem is, David, even though I (and lots of others) have common sense, even though I (and lots of others) know that high return implies high risk, even though I (and lots of others) would like to see this foolishiness punished (ideally deterred in the future, by that punishment), we who weren't at fault have to live in the same crappy economy that resulted from other people's foolishness. So where's the justice in favoring "punishments" that just make that economy worse for everybody, including the innocent?

As Burton Frierson points out in today's Int'l Herald Trib ("A lesson lost: Knowing the borrowers"), "[T]here were six U.S. mortage meltdowns from 1870 to World War II", with mortaged-backed securitization playing a role in the sudden blooming and collapse each time. If people are never going to learn (over the long run), the best you can do is clean up the messes afterward in ways that do the least harm to those who were not at fault, and try to institutionalize the lessons for as long as you can between bubbles and resulting messes.

So if bailouts have to be part of that, it's fine with me. (Mostly. Actually, not at all. But I'll bow to the necessity.) Moral hazard? We're talking about perpetrators who will either be ashamed for the rest of their lives for their ignominious role in the current mess (which should be punishment enough, in many case), or those who are utterly shameless, in which case their overweening pride is likely to survive even a long prison term quite intact. Sure, hand out prison terms for any who broke the law. But mainly: plug the leaks in the hull and start running a tighter ship again.

[armchair]

"People need to take responsibility for their own investments. If someone invests in a product they don't understand and it turns out badly, that's their own fault."

The real world simply does not work in accordance with this statement. The people who don't understand are the ones that suffer the most. The people that understand the most are the ones most likely to escape the consequences. It is the bigwigs who escape and the little guy who loses his house.

[armchair]

"People need to take responsibility for their own investments. If someone invests in a product they don't understand and it turns out badly, that's their own fault."

The real world simply does not work in accordance with this statement. The people who don't understand are the ones that suffer the most. The people that understand the most are the ones most likely to escape the consequences. It is the bigwigs who escape and the little guy who loses his house.