Monday, September 22, 2008

Party like it's 1929

About a year ago, having spent the day traveling cross-continent for a conference set to begin 1st thing next morning, I arrived at my hotel quite late. It being New York, the kitchen was open for another 1/2 hour. It being New York, a glance at the menu told me that much more than a beverage and a bowl of soup would exceed my public-university per diem.
At that hour the room was empty save for the 4 women and 4 men who sat at center table, lingering over the dregs of what appeared to have been a long and languid dinner. All 8 were dressed to the 9s. At the feet of each chair stood a shopping bag brimming with latest designer delights from Bloomie's, Versace, and the like.
The banter among the 8 likewise bespoke money: while supping my soup I found myself eavesdropping on a debate over the strengths and weaknesses of various wines, of the "good value" one could get from a particular bottle of $200 vintage, of how much better it was than its much-vaunted $500 rival.
None of the 8 looked old enough to have been drinking legally for much more than months.
My glimpse at Gatsby circa 2007 gave me the chills. It was a world far away from mine. A world worlds away from the vast majority of people in the world who every day struggle, literally, to survive.
That glimpse came back to me when research revealed, as I put it in an article published earlier this year in the Harvard Human Rights Journal, that "the income gap separating America's haves and have-nots is on par with that of the year just before Roaring Twenties boom ended in economic bust."
The glimpse came back to me again and again week as markets reeled -- as the world watched policymakers flying blind into a global economic storm.
The solution du jour for the United States -- and, if the United States has its way, for the rest of the world -- seems to be a massive public bailout of those wee Gatsby wannabes and the Wall Street financial complex that employed them. It's a solution offered with reassurances that call to mind another risky venture that the United States and some of its allies undertook 5 years ago.
In March 2003, Paul D. Wolfowitz, a Bush Administration bureaucrat, assured a Congress concerned about the U.S.-led invasion of Iraq:
'The oil revenue of that country could bring between 50 and 100 billion dollars over the course of the next two or three years. We're dealing with a country that could really finance its own reconstruction, and relatively soon.'
All know that reality took a different turn. Far from paying for itself, the Iraq incident has cost U.S. taxpayers trillions. Back in February Nobel Prizewinning economist Joseph Stiglitz and public policy expert Linda Bilmes gave Iraq a price tag of $3.3 trillion -- a number that, if claims that the war costs $720 million a day are right, is by now a profound underestimate.
The Stiglitz-Bilmes study, moreover, linked those costs to the economic crisis. "The Iraq war has cost the US 50-60 times more than the Bush administration predicted and was a central cause of the sub-prime banking crisis threatening the world economy," an Australian interview with Stiglitz began.
That interview, which spoke in present-tense of a "crisis," took place in February. IntLawGrrls likewise posted back then on threats to the economy. So why weren't leaders in Congress "stunned" by the grave state of the global economy long before this past week?
Let's hope that those leaders subject this Bush Administration reassurance to greater scrutiny than they did Wolfowitz' light and lively -- yet dead wrong -- predictions in March 2003:
Treasury Secretary Henry M. Paulson Jr. today defended the escalating price tag of his plan to rescue the financial markets, saying it is unlikely that taxpayers will end up paying the full $700 billion the Bush administration is requesting to buy the troubled mortgage assets of crippled financial firms.
Perhaps they might consider too these reassurances from 2 leaders of U.S. industry:
SCHWAB OPTIMISTIC ON BUSINESS FUTURE; He Tells Steel Men at Meeting That Industry Is Stable and Prospect Never Brighter. SEES PROSPERITY FIRM ... FARRELL BACKS HIS VIEWS Deplores Pessimism in Some Quarters ...
The date of The New York Times story that bore those headlines?
October 26, 1929 -- 3 days before the Crash that, finally, made all acknowledge that Gatsby had given way to the Great Depression.

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