FRONTLINE Last Night: Bush Not Involved in Dealing With Economic Crash
That was some PBS Frontline on Tuesday.
It was like a horror story. Bear Stearns, then Lehman, then AIG, then Freddy and Fanny.
Definitely watch it on line if you didn't see it yet.
The two most striking revelations (at least to me) were that (1) Secretary of the Treasury Henry Paulson seems to have let Lehman Brothers go belly-up after saving Bear Stearns because he personally had it in for Lehman's CEO from way back. And (2) the President of the United States was utterly uninvolved in the worst economic crisis since 1929. His name was never (or barely) mentioned. Every decision was made by Paulson, Ben Bernanke, and later, Congress.
No Bush.
I'm no Herbert Hoover fan. But he was involved in the 1929 disaster every step of the way. His decisions may have been wrong (some of them were right) but he made the decisions along with his Secretary of the Treasury.
Not Bush. Just as in the pre-9/11 period, he was the man who wasn't there. Can you imagine that being the case with President Obama (or any other President since, maybe, Buchanan)?
My bottom line. Had the election of 2000 not been stolen (1) there would have been no 9/11 because President Gore (like President Clinton) paid attention at the morning briefings and asked hard questions like, what's Bin Laden up to and (2) we might have ameliorated, if not prevented, the worst economic crash of the last 75 years.
Amazing. What a price we paid for Buish v. Gore. Thanks Sandy O'Connor and Anthony Kennedy. We owe you big time.
MJ: When Bush was presenton the program , what did he say?
"I'm not an economist."
That was his contribution.
February 18, 2009 9:57 AM | Reply | Permalink
Bush was always just the front man, the carnival barker, for the snake oil selling GOP.
February 18, 2009 10:12 AM | Reply | Permalink
We should be thankful Bush wasn't involved. It could have been much worse.
And as for Bush v. Gore, how about a shout-out to all those in the "liberal" media who spent campaign 2000 beating up on Gore and claimed there was no difference between the two candidates. Thanks guys. (Frank Rich, that includes you.)
February 18, 2009 10:15 AM | Reply | Permalink
Bush was involved, didn't he say:
"The fundamentals of our economy are strong"......
...which was then plagiarized by McCain?
February 18, 2009 10:18 AM | Reply | Permalink
You've returned after a long absence.
February 18, 2009 6:17 PM | Reply | Permalink
From an aesthetic point of view -- lots of dramatic black-and-white photojournalistic photos; short, clipped dramatic interview statements; all presented by the best narrative voice (Will "Whitethroat" Lyman) in teevee -- "Meltdown" was a tour de force.
As an explanation of last fall's banking crisis, not so much.
The high point of documentary is the Thursday evening meeting of Paulson, Bernanke, and Cox with the Congressional leadership when Bernanke announces that the financial system will crash by Monday.
"All the oxygen was sucked out of the room," says Sen. Dodd.
Congress did nothing; nothing happened over the weekend; nothing much happened to the system.
And the show offers no explanation of why this high drama turned out to be nothing more than the panicky reaction of men who were clueless -- or worse, whether the whole "crisis" -- the subject of the show -- was phony.
February 18, 2009 10:27 AM | Reply | Permalink
I was thinking about this yesterday but then I remembered that Krugman was for a bailout at the time. Could he have been duped too? Or was this really the mother of all 'Bust Outs'?
I really don't know. After reading David Cay Johnston's work on how corporations routinely force gov'ts to subsidize them, I really think Paulson had this in mind during the TARP "solution."
February 18, 2009 7:32 PM | Reply | Permalink
whether the whole 'crisis' -- the subject of the show -- was phony.
Yes, and thank God we understand now that it was phony, and everything is fine and the banks are thriving and the economy is going gangbusters.
How are things going on that planet you're living on, Ellen? A lot better than on this one, apparently.
February 18, 2009 10:50 AM | Reply | Permalink
It sounds like Peter Principle lives in his Own Private Iceland.
Iceland is what Bernanke promised us, isn't it? Didn't happen, did it!
February 18, 2009 12:46 PM | Reply | Permalink
Well Iceland would probably want to say something about that.
How much cash has disappeared down the rabbit hole known as AIG? Isn't that what staved off the collapse? If that 100 billion plus had defaulted right after Lehman wouldn't it have cascaded throughout? At least that is my understanding.
February 18, 2009 12:58 PM | Reply | Permalink
Wasn't AIG propped up BEFORE Paulson got TARP (and then again afterward)?
But I think that Ellen asking for the show to prove that the "crisis" was truly a crisis is asking a bit much at this point. There clearly was some kind of market crisis, and for Lehman it surely was worse than a mere crisis (not that Lehman was basically sound). And there's no question in my mind that Paulson engaged in scare talk, basically extortion, whether he was incompetent or just not clever enough to otherwise deal with the situation which had been growing before his eyes for many months.
I doubt that Bush had zero involvement along the way, but in the public view he was clearly just a front man.
February 18, 2009 3:38 PM | Reply | Permalink
IIRC AIG was saved on September 17, 2008; the dramatic meeting in the hallowed halls of Congress (I love the bouquets of flowers on the table), the EOTWAWKI high point of the show, took place on the evening of September 18, 2008.
February 18, 2009 7:50 PM | Reply | Permalink
Earlier on Monday [9/15/2008], the Fed hired Morgan Stanley to help determine the systemic risk an A.I.G. collapse would pose to the battered financial markets. Merced and Sorkin on their Times blog
Can you imagine not doing anything to figure out whether the biggest CDS seller in the world posed a systemic risk until the day Lehman goes under.
This crisis began when the two Bear Stearns hedge funds collapsed in July 2007.
What kind of a doofus -- yeah, I'm looking at you Bernanke -- does nothing about AIG for 14 months?
February 18, 2009 8:17 PM | Reply | Permalink
Poor Bernanke, he seems like such a nice well intentioned man. Although I too am dumbfounded.
But going back to my question, Once Lehman and AIG started to unravel, we pretty much had to do something large and immediate to quell a world wide run. I mean it became obvious that all of our investment banks were about to go under, and who knows what else.
I know its not quite as glamorous as Iceland but it likely could have been if we didn't do something. Once Congress was brought in and the show was put on then the world momentarily calmed and EOTWAWKI was averted. The solution didn't matter so much as the appearance of action. In my reading, it was the public show that had to happen (the flowers were a nice reassuring touch).
All the worlds' a stage...
February 18, 2009 11:32 PM | Reply | Permalink
While I realize that it is de rigueur to make much of the August 2001 Presidential Daily Briefing entitled "Bin Laden determined to strike in the US" and Bush's ignoring of it, it is a long way from lamenting Bush's inaction to saying that a more attentive president could have prevented 9/11.
There were virtually no specific operational details of the 9/11 plot known to the FBI and CIA in August 2001, only a series of suspicions by disconnected various agents. While Bush may have been asleep at the wheel, the rest of the counter-terrorism apparatus was certainly not. Despite the vast sums spent on intelligence and the sophistication of our systems, they failed to detect the plot. Thus the inability to prevent 9/11 must be laid at their feet. Sure, Bush was formally responsible etc. etc. but practically speaking, this was a product of CIA and FBI failure.
It is almost certainly the case that Gore would have asked more intelligent questions, would have directed a more focused effort and would have in general taken terrorism more seriously. But to say that because of that, 9/11 wouldn't have happened? I don't think you can say that. That's not to defend Bush per se. Just trying to be realistic.
February 18, 2009 10:51 AM | Reply | Permalink
In the case if Gore had been President, he would have taken steps to put the military on alert to be ready at a moments notice to react to any hostile action on American soil. As it was with Bu$h, the military was picking daisys in the fields and couldn't respond fast enough to counter the threats as events developed.
February 18, 2009 11:05 AM | Reply | Permalink
This makes no sense. Gore would have taken steps to put the military on high alert to be ready to react? Military reaction time was not the issue here. Intelligence was.
"Shaking the trees" might have uncovered the plot. But it also could have yielded little beyond what was already known, which wasn't much. The August 2001 PDB talked in general terms about bin Laden's aims. It didn't say anything about the known clues that could have led, with more digging, to the 9/11 plot. Bush would have had to take the general information contained in the PDB and conclude that a specific plot was brewing and that extraordinary measures beyond what was being done needed to be taken. Clearly, he should have done so. But that's hindsight.
In general, I think the hoo-hah over the August 2001 PDB is overblown. The media makes a big deal of it because it is the only tangible evidence that Bush was "warned" about 9/11. But I don't think there was enough in it to conclude that a more on-the-ball leader would necessarily have ordered extraordinary measures. In all likelihood, Gore would have paid more attention to terrorism in general, but probably wouldn't have reacted specifically to the PDB in a way wholly different from Bush. But we'll never know.
February 18, 2009 12:53 PM | Reply | Permalink
We can be sure Gore would have reacted differently; he is a sober individual with more brain cells working and more interest in good government. We cannot be sure that it would have made a significant difference (maybe the second plane would have been shot down, or fighters scrambled over DC in time to cause the Pentagon-bound plane to crash in a residential area, for instance). A month is a very short time. But it's clear that a "laissez-faire" Presidency is going to be at best reactive rather than proactive in most cases.
February 18, 2009 3:45 PM | Reply | Permalink
On Gore and terrorism, I just ran across this very interesting quote looking something else up:
Clinton didn't sign the extraordinary rendition directive until 1995; Gore, according to Clarke, was completely comfortable to go with it, with or without any CYA, in 93, just do it, legal or not.
February 18, 2009 10:47 PM | Reply | Permalink
A veritable fountain of great information you are AA, Nice research!
Definitely proves that Gore took the threat seriously, in a way that the bush admin did not. And what about the Minnesota FBI office that had a few of the 19 under surivalence? I can't recall why they were called off the case.
As a side point it is illuminating on his thoughts about covert action. I would certainly pick the occasional smart 'covert action' to the rampant and pronounced disregard of human rights/ international law we have had any day. Kinda sad to have to always pick the lessor of two evils though.
February 18, 2009 11:08 PM | Reply | Permalink
Well I must admit I noticed it because it confirms my own impressions of Gore, and that's a sort of cherry-picking, isn't it? Heh. Anyhew, I always thought of Gore as much more of hawk than Clinton, in the true sense of the word, a smart hawk, but a hawk. It comes from his religiousness, I think, and his father, he has this moral certitude thing about him. Clinton is a relativist (albeit with a decent heart.) Clinton also had a fear of putting boots on the ground anywhere because of his draft dodging which Gore didn't have as much because he served. I prefer the less hawkish, more relativist type president and must admit at the time I thought Gore would be a step down from Clinton. I think it's a wonderful thing when a president has a fear of putting boots on the ground, no matter what the reason.
But it turned out he probably would have been an excellent personality for the challenges of the time. The hawish, moralist qualities would have probably helped him deal with what happened very effectively. (I know, this is what a lot of liberals hate about Bush, but we have to remember back when Bush had a high approval rating, and what it takes to get the public behind you when there is a serious crisis in the country. Dithering "on the one hand, on the other hand" is not what people look for in times of crisis. The certitude thing can be used for good or ill.)
February 18, 2009 11:48 PM | Reply | Permalink
Thats interesting, I have similar assessments of the two, but always preferred Gore. I supported Clinton, obviously, but I never really trusted him. I appreciated his intelligence but it seemed to me he was indecisive. At the time I chalked it up to all the battles in Arkansas and posturing. But I think you might be right in drawing attention to the morality issue.
I recall once reading that sometime in his Clinton's first year Gore confronted him over his obvious lack of focus, and then a whole slew of changes happened that righted the ship. The author (or my memory) may have been exaggerating but it confirmed my opinion of Gore.
I think Clinton matured but only when forced, like after losing congress, and then it was too late (and his lack of discretion certainly didn't help). I can't help that note Clinton will be remembered for more republican polices than progressive ones (welfare, nafta, deregulation).
I think a leader needs to be both relativistic and know where he stands. If you don't know where you are going then how can you lead. There has to be enough certainty to push an agenda. That is why Bush was able to accomplish so many disasters. Thank god he didn't care about domestic policies (other than the soccer mom vote getter education).
I think Obama has a good combination, but we will see. Still, its too bad Gore 'sighed'.
February 19, 2009 12:19 AM | Reply | Permalink
In the clip from W's press conference, every word, every expression and all the body language signalled "I am out of my depth here."
About Gore and 9/11, Richard Clarke stated firmly that a firm response to the summer Daily Briefing, in the form of a directive to law enforcement agencies to "shake the trees" for information, would have had a good chance of revealing the plot.
February 18, 2009 11:17 AM | Reply | Permalink
Tres Sec Geithner and ex-Trea Sec Paulson both worked for Goldman Sachs, and Geithner in particular helped Lehman Bros go under since they were Goldman Sachs closest banking competitor... Former Pres Bush didn't have to be directly (or indirectly) involved, when you have your appointments doing the work for you.....namely, "Paulson, Ben Bernanke, and later, Congress". Author Tom Woods has a similar perspective; it's a career revolving door between the Govt, Federal Reserve, and Wall Street.... in his book, “Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse” he actually shares some thoughts coming from the Left, even though he argues mostly from the Right.
February 18, 2009 12:47 PM | Reply | Permalink
A lot of the more inexplicable bumbling of the Bush Administration is clarifed by affirming there was no leadership, there was no central clearinghouse of ideas and policy. There were cliques, uncommunicative, viral little groups all vying to implement their own plans and fetishes. But no one stood out front, making the final decisions - stopping the buck, as it were. Bush was an absentee jackass, a front man for an Administration thoroughly bereft of vision and imagination. In catastrophes of the past - the Civil War, WWII, the Great Depression - we lucked out; we were somehow blessed with leaders who, without anything beforehand to indicate such abilities, rose to the demands of the tumults and led well.
In the first decade of the new millenium - a more atrocious one not clearly recallled - we were stuck with Bush. Look around you. This is where we are now.
Happy?
What's the capial of Iceland?
$3.75.
( - Via Huffpo... we can still laugh, can't we?)
February 18, 2009 1:32 PM | Reply | Permalink
Yep...Bush wanted no part of it. It was Bernanke and Paulson's show. And they screwed it up beyond belief. They caused it by letting Lehman go under. I am not saying Lehman should have been 'saved' with a bailout but just like Bear Stearns they should have been forced on somebody. Yeah the fact that there seemed to be professional/personal animus on Paulson's part when deciding to make an 'example' out of Lehman. Just puts a nice bow on how the Bush Administration conducted business for the whole 2 terms...corruptly and incompetently. Their last example of incompetence is going to cost us dearly.
February 18, 2009 11:48 PM | Reply | Permalink