From a business perspective, the question for Murdoch isn’t what did he know and when did he know it — based on the big settlement checks his company was writing to victims of News of the World’s shoddy journalism, he must have suspected something was amiss. The more relevant question is why he didn’t he make it his business to find out last year whatever he suddenly discovered last week that led him to close down a profitable newspaper and fire two of his most trusted lieutenants. For that there is still no answer — and no excuse.
The latest Greek bailout plan is also a year late and a few euros short. By now there probably isn’t an economist or commentator who hadn’t warned that Greece, Ireland and Portugal were trapped in a debt spiral for which the only solution is some form of debt relief — lower rates, longer payment terms and writing off principal. At this point, lending those countries more money at market rates, while forcing them to dramatically raise taxes and reduce government spending, only serves to deepen the deficit hole by driving those economies further into recession.
Steven Pearlstein is a Pulitzer Prize-winning business and economics columnist at The Washington Post.
And yet that was exactly the strategy pursued by European leaders, the European Central Bank and the International Monetary Fund for the past year, allowing a two-alarm financial fire to become a five-alarm disaster that threatens Spain and Italy as well. All the major features of the latest rescue — from the bond swap to the bank bailouts to the reduced interest rates on official lending — were suggested and rejected last spring. That they have now embraced them is commendable, but it may prove more than a day late and a few euro short.
Here in the United States, the urgency of the budget deficit has been apparent for five years at least. And by last December, with a newly radicalized group of Republicans taking over the House, the Senate in perpetual stalemate and a wounded center-left Democrat in the White House, it was pretty clear where the center of political gravity was to be found.
Into that breach stepped a bipartisan blue-ribbon commission with a politically and economically credible plan to right-size the Pentagon and the civilian agencies, slow the growth of entitlements and reform the tax code in a way that lowered rates while raising a modest amount of money. Budget experts agreed it was pretty much what needed to be done.
Yet the only ones willing to accept that obvious reality were a bipartisan gang of six brave senators whose efforts got a cold shoulder from the same president and House speaker who just in the past several weeks were willing to acknowledge it was the way to go. By that time, however, the momentum had been lost and positions had been allowed to harden to the point that reasonable compromise now appears impossible. Treasury can probably kiss its triple-A rating goodbye.
The explanation for these leadership failures goes beyond the usual and perfectly valid cliches about procrastination and denial.
Perhaps it is true, as one crisis manager explained to me, that these leaders have seen so many potential crises get defused without having to make the hard decisions that it was quite rational for them to try to push these off as well, in the hope they would get lucky again.