Tossing Aside History, Conventions and a Few Cliches

Treasury Secretary Henry M. Paulson Jr. has adapted the Treasury's traditional powers to deal with the financial crisis. (Chip Somodevilla - Getty Images)

Enlarge Photo

Discussion Policy

Comments that include profanity or personal attacks or other inappropriate comments or material will be removed from the site. Additionally, entries that are unsigned or contain "signatures" by someone other than the actual author will be removed. Finally, we will take steps to block users who violate any of our posting standards, terms of use or privacy policies or any other policies governing this site. Please review the full rules governing commentaries and discussions. You are fully responsible for the content that you post.

When we look back, we may find that this crisis, like Katrina, was a turning point in public perceptions and expectations of government -- about its competence in dealing with the inevitable crises that occur and its ability to take steps ahead of time to assure that the damage is limited and the most vulnerable are protected.

Both the hurricane and the financial storm also offer reminders of the importance of having skilled and experienced leaders like Hank Paulson at the top of government agencies. It's a good guess that if the financial storm had hit while Paulson's predecessor was still secretary of the Treasury, John Snow would quickly have become the "Brownie" of Bush administration economic policy.

No doubt there will be those who see in this crisis further proof of the inevitable decline of the United States as a world economic power. In fact, it may be just the opposite. The wild swings over the past week in financial markets from Moscow to Mumbai, were only the most recent reminder of the increasingly global nature of capital flows and the risks of financial contagion. They also were a reminder that, in times of stress, global investors still seek refuge in the safety of the U.S. dollar, U.S. Treasuries and the skillful crisis management of U.S. policy makers.

Now U.S. taxpayers have been asked to come to the aid of banks and financial institutions that, while nominally American, have long since become global players. Meanwhile, foreign banks and investors are also benefiting significantly from the U.S. government initiatives. While that is the burden that comes with being the world's leading economic power, it raises the question of whether some of the costs and risks of our trillion-dollar rescue should be shared with other countries, through the International Monetary Fund.

Oh, and stay tuned. The weekend has only just begun.

Steven Pearlstein can be reached atpearlsteins@washpost.com.

< 2