Top-down crisis in confidence and words of sanity from Prague
Friday, March 13, 2009 E-Mail this story Free Headline Alerts
By John Metzler
UNITED NATIONS Ñ Economic pessimism is highly contagious; its symptoms are usually cured by massive doses of government spending which brings temporary relief but then usually postpones the cure to the problem.
Yes, we face a global recession. Yet the economic downturn has been turned into a spiral of doubt and fear by media pundits and many politicians who play the role of ÒChicken LittleÓ more than stewards of the worldÕs largest and most sophisticated economy. ThereÕs a top-down crisis of confidence.
The uplifting and often magisterial rhetoric of a Franklin D. Roosevelt (FDR) or Ronald Reagan is replaced by teleprompter talking points delivered not to conflict with American Idol. Optimism needed to boost the stock market is sadly lacking. Americans appear under anesthesia as to the dire implications of deeper debt and the slide towards socialism.
Without a wince of irony, the Democrat-dominated Congress passed the profligate spending $787 billion bailout (stimulus) bill appropriately on Friday the 13th ; IÕm certain that House Speaker Nancy Pelosi missed the symbolism. President Barack Obama happily signed on to the biggest spending package in American history.
Facts often fall by the wayside and a considerable number of Americans probably believe we are living in the 1930Õs in the midst of the Great Depression. Bad as it is, todayÕs unemployment rate of 8.1 percent, is not the 23 percent of October 1933, the 21 percent of July 1935, or even the 17 percent of January 1938. For an excellent book on this era, I seriously recommend The Forgotten Man øA New History of the Great Depression by Amity Shlaes.
Interestingly from Brazil, we hear some positive news, The countryÕs populist president Lula da Silva, a moderate socialist, is confident his country can ride out the economic crisis. In comments to the Financial Times Lula da Silva describes 2008 Òas an excellent yearÓ and says he remains optimistic about 2009. Brazil, one of the worldÕs biggest developing economies, grew by 5 percent last year though will go into neutral this year.
LulaÕs enduring optimism has brought him 84 percent poll ratings, which is quite amazing midway through his second term. Barack Obama, just halfway through his honeymoon Hundred Days, holds a comfortable but not outstanding 61 percent in the polls, but with the majority of Americans saying the country is heading in the wrong direction.
Worse still the economic report card from one hundred economists polled by the Wall Street Journal gives President Obama a failing grade. On average, they gave the president a grade of 59 out of 100, thatÕs an F in other words!
But fear not. The mainstream media rides to the rescue. Newsweek magazine gushes of the new America, ÒWe are all Socialists NowÓ The cover of Red and Blue handshake (Democrat and Republican) evokes a latter-day poster from some PeopleÕs Republic we would rather forget. But alas, the cover was in modern America and the cover date was sadly not April 1st. The era of Big government is back!
As an antidote to such ferocious stupidly, I look to the mystical medieval spires of Prague hearing another voice, one who addresses the wider problem of how we view capitalism. Vaclav Klaus, the refreshingly outspoken President of the Czech Republic recently told stunned parliamentarians in the European Parliament that, ÒWe must say openly that the present economic system of the EU is a system of a suppressed market, a system of a permanently strengthening centrally controlled economy.Ó He adds, ÒAlthough history has more than clearly proven that this is a dead end, we find ourselves walking the same path once again.Ó ThatÕs modern Europe and dollops of democratic socialism.
Klaus, a former Professor of Economics warns, ÒThis results in a constant rise in both the extent of government masterminding and constraining of spontaneity of the market processesÉthis trend has been further reinforced by incorrect interpretation of the causes of the present economic and financial crisis, as if it was caused by free market, while in reality it is just the contrary ø caused by political manipulation of the market.Ó
Having lived under a socialist regime, he knows the road and the signs too well. Klaus adds, ÒOver the twenty years since the fall of communism, I have been repeatedly witnessing that the feelings and fears are stronger among those who spent a great part of the 20th century without freedom and struggled under a dysfunctional centrally planned and state-administered economy.Ó
Recently speaking at a Wall Street Journal forum, when asked about his impressions of contemporary America, President Klaus stated, Ò I almost don't believe my eyes to see how much you believe in government and how much you don't believe in the marketÉ. This is for me a shocking experience..Ó It shocks many Americans too.