Sunday, July 24, 2011
If you stumble and just barely avert falling over the precipice, ought you thereafter assume it's okay to dance upon the spot? Yet that exactly what leaders are doing right now with the world's economic system.
The precipice was just two and a half years ago. Lest anyone think I exaggerate, here's the cover of the Economist that week*:
The fear at the edge was palpable. Did George Bush really fret aloud that “this sucker may go down!”? Panicked into doing something....anything...fast, Congress passed legislation infusing massive cash transfers into critical financial institutions, “bailing them out.” Essentially, the government printed more money, to the tune of $17,000 per American, (cumulative amount of all bailouts) using new public debt, the “promise to pay,” as the asset backing it. And after some breathless days.....ah....safety at last! It seemed to work, after a fashion.
But two and a half years later, the edge is back! Another related crisis, with consequences just as dire if its bungled. Come August 2nd, the United States....the world's largest borrower....will default on its debts unless Congress authorizes a higher borrowing limit. They've done this scores of times in the past, but this time they're stuck. How to do it? Cut spending (a lot), increase taxes (a lot), or kick the can down the road to deal with later? Always, the 3rd option has won out, but maybe not this time.
At present, 41 cents of every dollar spent is borrowed money, and credit rating agencies say they'll downgrade the U.S. credit rating in the absence of more financial discipline. They can't be bombed into submission, so it's a mixture of options 1 and 2, and nobody can agree on just what that mixture should be. So Congress and the President have been squabbling and stonewalling down to the present....dancing upon the edge...terms like 'financial Armeggedon' are bandied about in the event they do not succeed. Even to come near the date without an agreement is said to freak out the markets, which have always assumed that somehow these characters will get their act together.
But Friday (July 22nd) there was 'meltdown' in the negotiations and PBS commentators Mark Shields and David Brooks, never at a loss for words about anything, were dumbfounded:
MARK SHIELDS: Jim, what you have just seen is the rupture of the summit..... And the time is now short. I mean, the grand deal appears to be in shambles. And now the urgency is to raise the debt-ceiling and get it done.
DAVID BROOKS: Yes, shambles, a complete meltdown, apparently. I have never seen a presidential press conference with a president so angry in public.....if those [terms of a proposed agreement] are real, then I think it was a pretty good deal. But the president's tone of being the only adult in Washington, everyone else is a child, that he's going to summon people to the White House as if they are kindergartners, well, even if you agree with them on the substance, it's kind of hard to go along with someone who is insulting you all the time.
.....And now we're down to the point of, you know, look, we're staring right down the barrel of Aug. 2.
…..JIM LEHRER: Is it conceivable that they will not make a deal, or they will make it in such a way that the government of the United States of America will actually go into default?
DAVID BROOKS: Yes, I had been going in thinking there was a 10 or 20 percent chance of that. Now I would move that up to 30 or so.......
MARK SHIELDS: I still -- I'm just -- my native optimism just insists that these -- in the final analysis, they're not partisans, they're grownups, they're Americans, and they know how far how grave the consequences are.
JIM LEHRER: But then why are they acting the way they're acting?
MARK SHIELDS: It's -- it -- Jim, it's a question that I don't have the answer for.
(Greatly abbreviated. Click above for the full transcript)
Of course, the public seethes over this and threatens to vote everyone out come next election. But surely that's a tired response. For people haven't been betrayed by their leaders....who are only doing just what one would expect them to do given the dramatically opposed constituencies they represent. This is the classic “iron mixed with clay” of Daniel 2:42-43. They're honorable people, for the most part, doing their best. Looking out for themselves at the same time, no doubt, but who doesn't? Rather, people have been betrayed by an idea....namely, that human rule, in this case government “by the people,”....works, and can solve our ever-deepening woes.
Oh yeah, Tom Sheepandgoats, oh yeah!? Well, if you don't think 'government by the people' works, tell me of some government you like better. Exactly.......I can't. They all have strengths. They all have weaknesses. And in each case, the former is outweighed by the latter. It simply goes to show that human rule itself is the problem, and that “we need the Kingdom”.... that heavenly Kingdom which the Bible speaks of and which Jehovah's Witnesses publicize.
But human self-rule is an article of faith unrivaled among notions today. Nobody likes to throw dirt at it. So instead they throw dirt at the persons involved, thinking they are the problem, and not the system itself. Yet the Congressmen themselves feel betrayed. They give their all to a system, believing as strongly as any religionist that that system will deliver, only to retire disillusioned, though always replaced by someone new who hasn't yet learned the lesson. Said Senator John Danforth, back in 1981: "I have never seen more Senators express discontent with their jobs....I think the major cause is that, deep down in our hearts, we have been accomplices in doing something terrible and unforgivable to our wonderful country. Deep down in our heart, we know that we have given our children a legacy of bankruptcy. We have defrauded our country to get ourselves elected."
Partly accounting for government truculence on economic matters is that past solutions have not proven effective. Accordingly, Senator Ron Paul grilled Fed Chief Ben Bernanke on the $17K per American ($5.1 trillion total) given to bail out the banks. Since there's been no discernible economic benefit, he mused, the Fed could have simply given each and every American $17,000.
Consumer spending would have increased, surely. And consumers could catch up on their loans, or even pay them off, so the bank would hardly suffer. And some might pool their allotments together, forming new enterprises and creating new jobs. Instead, the banks were given the $5.1 trillion directly, for their liquidity, while still holding ordinary persons on the hook for the full amount of whatever they might owe.
But Paul rushed his questions and cut off Bernanke's answers. Why? Senate sub-committee rules: he's only allotted 5 minutes! Right! And if it was the end of the world he was speaking about, he'd only have two minutes! But if it was the brand of coffee to be served during breaks, for that maybe he'd have 60 minutes or more. Shades of Parkinson's Law, if ever there existed any.
I tell you, this is absolutely amazing. And it comes right down to the wire. Perhaps the 30% chance of disaster will not occur just now, and will be postponed a bit. But the answer, God's Kingdom, is being steadily proclaimed unitedly the world over. And yet, because it's proclaimed by humble, ordinary people, it's largely ignored. After all, how many Jehovah's Witnesses have gone to Harvard? How many of them are wealthy and influential?
“For the speech about the torture stake [cross] is foolishness to those who are perishing, but to us who are being saved it is God’s power. For it is written: “I will make the wisdom of the wise [men] perish, and the intelligence of the intellectual [men] I will shove aside.” Where is the wise man? Where the scribe? Where the debater of this system of things? Did not God make the wisdom of the world foolish? For since, in the wisdom of God, the world through its wisdom did not get to know God, God saw good through the foolishness of what is preached to save those believing.” Rom 1:18-21
You know, the wisdom of the world does look foolish these days. More foolish all the time. And more disheartening for those who trust in it.