Talk About the Meltdown
When I lived in Buenos Aires in the late 1980s as a correspondent for The Post, Argentina's economy was going through spasms of hyperinflation. My office was in the heart of the financial district, where banks and currency traders had electronic signs in their windows showing the value of the Argentine austral against other currencies. When things got really bad, crowds would gather and watch their wealth evaporate minute by minute as the numbers went south.
That's how I feel these days when I watch cable TV and focus not on the news anchors but on the hyperactive Dow Jones ticker at the bottom of the screen. Up 100 points, down 200, rallying, retreating, meandering, "looking for a bottom," falling off a cliff. Another day, another triple-digit decline.
I know that our mammoth economy bears little resemblance to Argentina's, or Brazil's, or any of the other economies I covered in South America. I know that we're dealing with a mortgage meltdown and a credit crisis, not runaway inflation. But one thing is the same: the feeling of free fall into some sort of abyss.
It's not just the United States that is experiencing a Third World-style economic disaster. Iceland -- tidy, rich, Nordic, postcard-perfect Iceland -- is scrambling to avert national bankruptcy. Throughout what we used to call the Western world, governments are nationalizing banks, guaranteeing deposits, cutting interest rates and taking other heroic measures to stave off collapse.
I'd like to know how the presidential candidates view this economic crisis, and I don't want any boilerplate about how American workers are the best in the world. Is this a temporary setback or a fundamental shift? When the volatile markets settle down, as they eventually will, is the United States going to be a poorer nation than it was? Will the next generation of Americans lead lives of less affluence and comfort, rather than more?
I want to know whether this is some kind of final reckoning for living so far beyond our means. Is the bartender finally presenting us the the bill?
I'd like Obama and McCain to really get their minds around what's happening and explain what they think we ought to do. They both know that we've borrowed trillions of dollars, a good deal of it from China, to pay for our expensive habits. They know that the United States, Europe and Japan have transferred massive amounts of capital to the oil-producing countries. McCain and Obama know that the tallest building in the world is in Dubai. They know that high prices for oil and natural gas have given Russia back its status as a great power.
The candidates also know that whoever takes office in January will be constrained by economic and fiscal reality. Debt service and entitlements already impose limits on discretionary spending for new initiatives. By Inauguration Day, how many "bad" mortgage-related investments will the U.S. government own? How much more money will the Treasury have poured into the insurance giant AIG? We already own nearly 80 percent of the company, for which we paid $85 billion; company executives celebrated by treating themselves to a $440,000 retreat at a luxury resort. On Wednesday, taxpayers ponied up an additional $38 billion for AIG. Will the tone-deaf executives rent the Taj Mahal for their next party?
When I was covering South America, it was said that Brazil could be thought of as "Bel-India": There was a small, powerful, rich elite who lived so comfortably they might as well have been in Belgium, and there was a huge, poor majority whose living conditions at times resembled those in India. Since I left the region, Brazil has become wealthier, and income distribution has improved. In the United States, income distribution has gotten worse.
I'm worried that this economic crisis may be more than just an episode. I'm worried that what's at stake is not just a few years of lost economic growth but our traditional notion of the American dream.
Sen. Obama? Sen. McCain? Reassure me. Don't give me empty words about American exceptionalism. Tell me in plain language what our new place is in the world and how we're going to give our children the good life that we've enjoyed.