I suspect there are those that would argue these are the End Times. It seems economies are heading toward ever-tighter downward spirals. All the anti-globalists must be dancing to their hearts’ content. Cataclysmists would probably even cite the Global War on Terrorism as another indicator the time is near.
Others might at least attribute the Perfect Economic Storm on the right mix of overspending, overconfidence, overrisky behavior, and overignorance. The US government—what Ted Nugent calls Fedzilla is out of control. The executive branch does what it wants to and the legislative branch, which no longer represents the People, huffs and puffs and then funds it. So, from years of special interests on the Hill, what seems a growing “my pork is better than your pork” attitude among Senators and Representatives, corporate greed, slackening moral fortitude, and increasing financial creativity, here we are. Concerned about circling the drain.
I don’t think of myself as an optimist, but I don’t think this is the economic apocalypse, either. So, it must be the economic Titanic. Even though many claimed the economy was unsinkable, there were voices of caution. Consider Michigan’s Representative John Dingell’s remarks in 1999. He warned about confusing regulation and overlapping liabilities. And he predicted taxpayers would get the bill—I’ll bet he didn’t envision $1.4 trillion or more and the global ripple effect. Apparently, Dingell didn’t believe the economy was unsinkable.
Undoubtedly, there have been countless economists pontificating on both sides of the argument. I don’t know what Warren Buffet’s credentials are, but being the second richest man in the world (at least in 2003) makes him a subject-matter expert in my book. That’s when he said, “Derivatives are financial weapons of mass destruction.” Seems he was right, since 5-1/2 years later, we’re not even sure of the initial damages yet, let alone that to come from the fallout.
Go figure. Dingell said there were financial icebergs out there, but Gramm-Leach-Blilly passed anyway. One of the bill’s key features was to allow the mega-mergers that permit failures like WaMu to have such significance. Buffet said watch out for the icebergs, but subprime loans continued and, below the surface, so did the credit derivatives. And the band played on.
So here we are. Our economic ship has a big gash in it. Did the lookout fall asleep? Who was missing from the bridge? Looks like Anderson Cooper might have some clues for us.