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Party of the pocketbook

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As the latest Bush recession heads into its second dip, it’s washing away one of the oldest truisms in American politics.

When I was growing up in the ’60s and ’70s, conventional wisdom about our political parties was clear: Democrats stuck up for working people and minorities, but you couldn’t trust them with your money. For that, you wanted a Republican. This reached a head in the late ’70s, as Jimmy Carter faced runaway inflation, oil shocks and unemployment, and couldn’t seem to make headway against them. Reagan’s election brought a recession, a tax cut and a deepening federal deficit — but one way or another he got credit in the national mythology for dispelling the Carter malaise and putting the economy right.

Since Reagan, though, a new pattern has emerged, not just in the reality of the economy’s numbers but in the shorthand of the popular mind. Bush I: Recession. Clinton: Economic growth. Bush II: Recession.

Circumstance and luck play a huge part in all this, to be sure. But patterns like these are what build popular myths. If Bush doesn’t begin improving the fumbling performance of his economic team, or break free of his “tax cut or die” ideology, he could inherit a cruel variation on James Carville’s mantra from the 1992 election — as “It’s the economy, stupid” gets transformed in the popular mind to “It’s stupid’s economy.”

Barons of bankruptcy

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How much money did executives at now-bankrupt companies pocket while their firms were circling the drain? The Financial Times investigates and offers this eye-opening table. (Thanks to Rafe Colburn for the link.) (Warning — those FT links won’t open if you use Opera or any other offbeat browser. Don’t you hate that?) (And in the time between my posting this morning and now, 6 p.m., the Financial Times has made these articles “subscription only.”)

Jenkins’ ear

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I love reading Holman W. Jenkins Jr.’s Wall Street Journal column for its insights into how business leaders think. Not for Jenkins is the conciliatory, “let’s look at things from the other side’s point of view” approach of his colleague Al Hunt, the Journal’s token near-liberal. Jenkins provides the unvarnished master-of-the-universe capitalist perspective — you can practically hear the squeak of the armchair leather, the chomp of the cigar. This, say his columns, is the way the world works. (Interestingly, Jenkins’ bio suggests he has spent his entire career in journalism and has no business experience.)

Today Jenkins reviews the business careers of our president and vice president and exonerates them of any wrongdoing. So what if Bush benefited from some sweetheart transactions? So what if Cheney sold Halliburton high before asbestos laid it low? They’re businessmen, dammit — this is what they do!

Look, you government-handout-seeking lefties: “Mr. Cheney was hired to open doors… Not to belabor the obvious, but a big part of Mr. Bush’s value to partners and investors was his political visibility too.” What are you, an idiot? Of course businesses hire politicians because of who they know!

Such honesty is disarming. Strangely, though, in Jenkins’ analysis, the moment Bush and Cheney got elected, everything changed: “Only a moron suspects Mr. Bush or Mr. Cheney went to the trouble to become president and vice president to throw bones to business cronies.”

In other words, when out of office, Bush and Cheney got paid the big bucks to win friends and influence people, because they were so well-connected; but once they took office, they suddenly cast off all ties to their “cronies” and were transformed into even-handed public citizens.

Permit me to be moronic, then, for a moment: Maybe Bush and Cheney did not become president and vice president solely to “throw bones to cronies”; maybe they got elected with the help of those cronies’ cash and intend to repay the help with far more than bones. Maybe the “you wash my hands, I’ll wash yours” deals that made Bush his fortune as a private citizen bear a striking resemblance to the “you wash our hands, we’ll wash yours” relationship his administration has maintained with its friends in business. Maybe it’s the way the world works that’s moronic.

Recession? What recession?

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Last winter the economics establishment reviewed its numbers and declared that we’d entered a “light” recession in 2001 but that it was so brief — only one quarter of actual “negative growth” (economist-speak for “decline”) — that it didn’t even technically qualify as a recession (two consecutive quarters of “negative growth”). This came as heartening news to the legions of laid-off workers, who could at least console themselves with the knowledge that the Bush administration was planning to bank some of their Social Security money in the collapsing stock market.

Now it turns out that the economy actually shrank for the first three quarters of 2001 (most of which predated the 9/11 disaster). Yes, Virginia, there was a Bush recession. For much of the U.S., there still is.

Invisible hand or dead hand?

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Tonight’s Salon cover story surveys economists and other experts on the pressing question: What should President Bush do about the cratering markets and becalmed economy? We know Bush’s own prescription: He wants to lower taxes for the wealthy further, to stand by his bizarrely disoriented Secretary of the Treasury (who told reporters, according to Bloomberg News, “I’m constantly amazed that anybody cares what I do”), and take a monthlong vacation at his ranch. As the New York Times’ Paul Krugman keeps reminding us, Bush’s economic plan has remained unchanged from 1999 — when the economy looked, ahem, very different. This is known as the “dead hand on the tiller” approach, and it usually leads to a nasty collision.

Capitulate, bottom feeders!

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One of the stranger things about the stock market’s current desolation is the game of “find the bottom.” A market bottom, we’re told, arrives only when the last bull has expired and the last optimistic investor throws in the towel. This is known as “capitulation.” Once the market has achieved capitulation, then it can turn around and begin climbing again.

But the very act of saying “We’ve hit bottom, now I’m going to invest again” means that you are not capitulating, and therefore the bottom hasn’t yet arrived. So, paradoxically, there is no bottom as long as someone thinks there’s a bottom. Only when everyone believes that the market is just going to keep dropping, and hasn’t hit bottom yet, has a bottom been truly reached. Of course, at that point there’s no one left to buy and start the turnaround.