A Recession Mystery
This "great recession" has harshly reshaped the lives of tens of millions of Americans and hundreds of million of people around the world. And yet in one way, it has had surprisingly little impact: We have not seen the kind of upsurge of anti-system political radicalism that might have been expected to follow so painful a shock.
Last week's grim unemployment news again confirms the current downtown's miserable status as the worst recession since the Great Depression itself.This "great recession" has harshly reshaped the lives of tens of millions of Americans and hundreds of million of people around the world. And yet in one way, it has had surprisingly little impact: We have not seen the kind of upsurge of anti-system political radicalism that might have been expected to follow so painful a shock.
For more than 6 months, Americans have heard one revelation after another of betrayal of customer interests by financial firms - of reckless risk-taking, self-dealing and dereliction of fiduciary duty. Yet there has been no wave of outrage against banks and bankers. The furor over the AIG bonuses blew over in 48 hours. The Obama administration's promised financial "reforms" turn out astonishingly modest. Who would have imagined that after the worst financial crash since 1929, the only institution to be threatened with abolition by the federal government would be ... the Office of Thrift Supervision?
In fall 2008 a friend in a very senior job on Wall Street confided to me, "When the public discovers what has been going on these past years, there is going to be a reaction that will turn this country upside down." Hasn't happened. There have been no modern equivalents of the Depression-era Pecora hearings. An unequivocal crook like Bernie Madoff can be sentenced to prison, but who has a harsh word to say against Franklin Raines? The public by and large has been trusting and accepting of established institutions and traditional leaders.
Why?
I think the short answer is: Barack Obama. Elected just weeks after the crash, he switched the public mood. Discredited leaders were replaced, a flurry of new initiatives launched - and poll measures of public optimism surged. With so many Americans expecting a rapid turn-around and restoration of fortunes, why waste energy being angry?
Now though (as that seem chart suggests) there seems to be a waning of optimism - and a gathering doubt whether the president's measures really will make any difference. Anxiety about debt is intensifying, and debt is often a proxy for other fears about the future.
Conservatives and Republicans tend to assume that we will be the beneficiaries of an Obama stumble. I wonder about that. If by, say, December 2009 Obama's measures are perceived to be unsuccessful, will Americans really immediately then revert to supporting his predecessors? Or will they say: We tried the Republicans and that failed, we tried Obama and he has failed - now we need to try something altogether different? Could we see disenchantment with the party system, like that now gripping the United Kingdom? An opening to more radical attacks on the financial system, like those now being aired in hard-pressed central Europe?
I offer no answers. Only worries.
Now though (as that seem chart suggests) there seems to be a waning of optimism - and a gathering doubt whether the president's measures really will make any difference. Anxiety about debt is intensifying, and debt is often a proxy for other fears about the future.
Conservatives and Republicans tend to assume that we will be the beneficiaries of an Obama stumble. I wonder about that. If by, say, December 2009 Obama's measures are perceived to be unsuccessful, will Americans really immediately then revert to supporting his predecessors? Or will they say: We tried the Republicans and that failed, we tried Obama and he has failed - now we need to try something altogether different? Could we see disenchantment with the party system, like that now gripping the United Kingdom? An opening to more radical attacks on the financial system, like those now being aired in hard-pressed central Europe?
I offer no answers. Only worries.