The Credit Crisis, George Bush, and You and Me: Placing the Blame for Lehman et. al. Where it Belongs

posted by Curt, on September 15, 2008 07:54 pm

Today's collapse of Lehman Brothers has me (and a lot of other people) thinking about "what went wrong." A lot of people are blaming President Bush for the current credit crisis. And I can't really blame them for wanting to. Bush has been a complete and total failure financially. He has been one of the most recklessly irresponsible money managers our country has ever had, and our children will pay for his massive deficit spending. But I'm not going to let people get away with blaming Bush for this one. With the little influence I have I'll speak out and tell anyone and everyone who can hear me that we are the ones to blame. Not Bush, not Clinton, not Reagan: us.

I think this is important to get the blame game right on this one because Bush will be gone in a few months, and if we don't place the blame were it belongs, things will never have a chance of changing. History-types like to use the phrase that goes something like this:

Those who don't learn their history are doomed to repeat it.

Allow me a little paraphrase:

Those who refuse to take responsibility for their mistakes are doomed to repeat them.

So, in the interests of trying to avoid this happening again (at least for a while), let me tell you why we're to blame.

This is not a Presidential economic crisis. It's not driven by tax policy, trade policy, ideology (in the conservative v. liberal sense), or even foreign policy. The current economic crisis is a credit crisis, driven by individual credit and purchase decisions. In other words, it's the end result of America's consumption-based value system of the last 30 years. And, though it was arguably facilitated by the loose-money policies of the Federal Reserve (only a quasi executive agency) since it's the result of individual money management (or mis-management, usually) decisions, it was certainly not caused by the Fed's policies.

No, the bubble, and its popping, resulted from that wonder of the economic world, the incredible American consumer, who spent at all costs and nearly singlehandedly brought the world's financial system to its knees. The credit bubble created by our financial overextension was so big and so fragile at the same time, that it only took a couple shocks (think declining asset prices and $4 gasoline) to its system for it to collapse. And the collapse is in process despite the government's best efforts to forestall it. Bush has done everything he legally could (and, arguably illegally) to prevent what has happened today. He's not the cause of it, we are.

All George Bush is guilty of, at least as far as this crisis is concerned, is the same thing that all of the other Presidents of the last 30 are guilty of: being unwilling to stand up, during a bubble and tell people that the prosperity is false and that the bubble's got to be popped before it gets any bigger. Of course, doing that today is equivalent to committing political suicide. We won't let any politician do that. The minute he tries, we exercise the franchise and strip him or her of power. Ultimately, the failure of our government to arrest the credit crisis before it reached epidemic proportions is all on us. The financial irresponsibility of the government is nothing more than a mirror image of our own bad fiscal habits, albeit on a much larger scale.

So, America, today we got the first installment of our bill for granite countertops, big SUVs, ridiculously expensive and inefficient trucks, four-wheelers, boats, designer clothing, and all the other forms of unnecessary, conspicuous consumption that you can think of. I predict that many of us will be shocked at the price tag. Eventually, this crisis will work itself out, as painful as it's going to be. But if we want to make sure it doesn't happen again, it's going to take more than switching parties in an election year. President Bush is the wrong target for our frustration. It needs to be turned around and focused straight on you and me. If we don't realize that, we're not going to solve anything, and we'll start building the next credit bubble as soon as this one is done popping.

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