The DJIA dropped perilously close to 7,000 this afternoon after Chris Dodd said the government might have to nationalize the banks. David Brooks wrote in his NY Times editorial today what is probably the Obama administration line, that we might have to bite the bullet and give the idiots who got us into this mess lots of money to get us out again. He says:
…sometimes you have to shower money upon those who have been foolish or self-indulgent. The greedy idiots may be greedy idiots, but they are our countrymen. And at some level, we’re all in this together. If their lives don’t stabilize, then our lives don’t stabilize.
I suppose that’s all good and well, though if you happen to live in the same place as “the idiots” (i.e. New York City), and you see them holding their heads up high, riding in new cars with new wives who are wearing massive sparkly rocks on their fingers because the bankers got their bonuses in January, you might worry more about political stabilization than economic stabilization.
The markets took a dive because Dodd raised the specter of state control over the financial industry. But isn’t that exactly what’s called for in this situation? The culture of free markets failed, and now the culture of civic responsibility — which can only be manifested through the institution of government — has to pick up the slack.
Obama’s men — Geithner and Summers — are freemarketeers and have good reason to be scared out of their wits by populist posturing from Dodd and others. But is Obama a freemarketeer? Is he a populist?
My first instinct is to say he’s a savvy operator who knows the congressional Dems are right (and that the right needs to be ideologically disillusioned). The Obama of my imagination will play the aloof leader and let the Dems do the necessary dirty work that undoes the damage of anti-social freemarket puritanism inflicted on us since Reagan.
My fear is that he has no convictions outside of a personal messianic conviction, and that he thinks economic justice is no more or less important that religiously unfettered economic activity.
The markets bounced back because they think Obama’s a covert freemarketeer. I hope they’re wrong. I hope Obama is willing to split the issue with the congressional Dems, and let leaders like Dodd do the work of justice while Obama tells us all not to panic.