By Dan Froomkin
Special to washingtonpost.com
Friday, October 10, 2008; 12:14 PM
When it comes to the current financial crisis, it's become pretty clear that an appearance by President Bush doesn't calm nerves. It rubs them raw.
With global markets in a state of panic, with the world talking about the end of American capitalism, with ordinary citizens watching in despair as their savings vanish, we could all use some reassurance.
Had the president this morning announced something new, specific and verifiable, it might have helped. Most economists are persuaded that the semi-nationalization of American banks through direct infusions of capital is our best bet at this point. And the administration is reportedly working on a plan to do just that.
But today all Bush gave us was limp cheerleading, vaguely assuring us he's doing everything possible.
The president seems checked out. His approval ratings are in the toilet. His credibility is shot. He's arguably responsible for this mess in the first place. And his presence and his words have led to more fear and panic, not less.They Just Don't Get It
Bush still seems to be operating in a fantasy world where people look to him for direction. His eight-minute speech in a sunny Rose Garden this morning consisted of a dry laundry list of previously announced government actions, punctuated by listless platitudes.
"Here is what the American people need to know: That the United States government is acting. We will continue to act to resolve this crisis and restore stability to our markets," he said.
"Anxiety can feed anxiety. And that can make it hard to see all that is being done to solve the problem. The federal government has a comprehensive strategy and the tools necessary to address the challenges in our economy. Fellow citizens, we can solve this crisis, and we will. . . .
"As we act, we will do so in a way that is effective. The plan we are executing is aggressive. It is the right plan. . . .
"This is an anxious time. But the American people can be confident in our economic future. We know what the problems are. We have the tools to fix them. And we're working swiftly to do so."No Confidence
Demian McLean writes for Bloomberg: "Previous statements by Bush and members of his administration haven't calmed markets since Congress passed a $700 billion bailout package intended to shore up banks and other financial institutions and stabilize markets.
"Since Oct. 1, when the Senate gave final passage to the legislation, Bush has spoken publicly or issued statements about the rescue plan and the markets six times and the Dow has fallen 20.8 percent.
"'Right now the fear level among investors is high and it's hard to see anything from him making much of a difference,' said Frederic Dickson, who helps oversee $25 billion as chief market strategist at D.A. Davidson & Co. in Lake Oswego, Oregon."
Michael Oneal and Greg Burns write in the Chicago Tribune: "'I think this is all-out panic,' said Jim Paulsen, chief investment strategist for Wells Capital Management in Minneapolis. 'It's gone from economic problems creating fear to fear creating economic problems.' . . .
"Paulsen . . . said he believes attempts by President George W. Bush's administration to sell its $700 billion economic rescue plan may have sown the seeds of the current confidence crisis. How could it not erode faith in the economy, he asked, to have the president, the Treasury secretary, the Fed chairman and congressional leaders 'tell the country day after day that we've gone to hell?'"
Elaine Quijano writes for CNN: "[A]nalyst Anne Mathias with the Stanford Group says for Bush, trying to reassure Americans and the markets is problematic on several levels.
"'The first part is that he's really not very popular right now. . . . The second part is that he is not very fluent in discussing these kinds of issues' . . .
"Mathias says the third difficulty for Bush is credibility. 'There are many who oppose him or are upset with the White House who put the blame for us being in this position at his feet,' she said. 'It's difficult to be a credible part of the solution when many people think you are part of the problem.'
"In the latest CNN Opinion Research Corp. poll, 26 percent of Americans expressed confidence in the president's ability to handle the financial crisis, compared with 52 percent for Treasury Secretary Henry Paulson, who has been President Bush's point man on the crisis."
Terence Hunt writes for the Associated Press: "Since news of the government bailout of the financial industry first broke, Bush has commented on the economy on 19 of the past 22 days.
"Perino said Bush, after his statement on Friday, would proceed with his scheduled trip to Coral Gables, Fla., and Kiawah Island, S.C., for political fundraisers and a meeting with the Republican National Committee. He also will meet with representatives of the Cuban-American community in Florida."How Bad Is It?
Renae Merle, Michael A. Fletcher and Neil Irwin write in The Washington Post: "'I've never seen a panic like this,' said David Wyss, chief economist at Standard & Poor's. 'I've seen stock market drops, but not an overall panic.' . . .
"'It's a domino effect. Stocks are falling out of bed. There is distrust in the market and distrust in the government that is trying to heal this,' said Peter Cardillo, chief market economist with New York-based Avalon Partners."
Anthony Faiola writes in The Washington Post: "The worst financial crisis since the Great Depression is claiming another casualty: American-style capitalism.
"Since the 1930s, U.S. banks were the flagships of American economic might, and emulation by other nations of the fiercely free-market financial system in the United States was expected and encouraged. But the market turmoil that is draining the nation's wealth and has upended Wall Street now threatens to put the banks at the heart of the U.S. financial system at least partly in the hands of the government. . . .
"[T]he hands-off brand of capitalism in the United States is now being blamed for the easy credit that sickened the housing market and allowed a freewheeling Wall Street to create a pool of toxic investments that has infected the global financial system. . . .
"'People around the world once admired us for our economy, and we told them if you wanted to be like us, here's what you have to do -- hand over power to the market,' said Joseph Stiglitz, the Nobel Prize-winning economist at Columbia University. 'The point now is that no one has respect for that kind of model anymore given this crisis. And of course it raises questions about our credibility. Everyone feels they are suffering now because of us.'"On the Horizon
Although Bush didn't announce it this morning, there are signs that he will eventually sign off on a radical, but at least theoretically effective, next move -- even though it violates his core political principles and is exactly the approach his administration rejected two weeks ago.
David Cho, Binyamin Appelbaum and Lori Montgomery write in The Washington Post: "The Bush administration is hammering out the final details of a plan that would allow the government to inject cash into banks in exchange for ownership stakes in an effort to shore up confidence in the faltering financial system, according to officials and sources who have been in contact with the Treasury Department. . . .
"The proposal already is generating controversy on Capitol Hill and among private-sector firms concerned that a broad intervention of this kind would represent a vote of no-confidence in the entire banking industry, not just troubled institutions.
"White House press secretary Dana Perino suggested yesterday that President Bush would support a government move to buy shares in troubled U.S. banks if Treasury Secretary Henry M. Paulson Jr. decided to do so."
Mark Landler and Edmund L. Andrews write in the New York Times: "The Treasury's openness to direct infusions of cash is a remarkable change in tone from a few weeks ago, when the Treasury secretary, Henry M. Paulson Jr., and the Federal Reserve chairman, Ben S. Bernanke, discouraged such actions in testimony before Congress. 'Putting capital in institutions is about failure,' Mr. Paulson declared on Sept. 23. 'This is about success.' . . .
"The switch may also reflect growing doubts about the Treasury's plan to purchase mortgage-related assets. . . . [T]he concept is untested, experts said, and the deteriorating market conditions had further dimmed its prospects.
"'I don't think the plan is getting off the ground,' said Martin N. Baily, an economist at the Brookings Institution."Opinion Watch
Paul Krugman writes in his New York Times opinion column that "key policy players have largely wasted the past four weeks. Now they've reached a moment of truth: They'd better do something soon -- in fact, they'd better announce a coordinated rescue plan this weekend -- or the world economy may well experience its worst slump since the Great Depression."
As for Bush's bailout, "it soon became clear that the plan suffered from a fatal lack of intellectual clarity. Mr. Paulson proposed buying $700 billion worth of 'troubled assets' -- toxic mortgage-related securities -- from banks, but he was never able to explain why this would resolve the crisis.
"What he should have proposed instead, many economists agree, was direct injection of capital into financial firms: The U.S. government would provide financial institutions with the capital they need to do business, thereby halting the downward spiral, in return for partial ownership. . . .
"[I]t will be very alarming if this weekend rolls by without a credible announcement of a new financial rescue plan, involving not just the United States but all the major players."
Blogger Atrios (Duncan Black) yesterday looked ahead to today's announcement: "The preznit is going to get on the teevee tomorrow morning and make it all better.
"SELL SELL SELL"Transition Watch
Bush's last 100 days start on Sunday.
Dan Eggen writes in The Washington Post: "President Bush created a special council yesterday to guide the transition to a new administration, another step toward the end of Bush's eight tumultuous years in office. . . .
"The team will be chaired by White House Chief of Staff Joshua B. Bolten and will include at least 14 other senior officials such as the attorney general, the national intelligence director and the national archivist, according to the order. . . .
"Paul C. Light, a professor of public policy at New York University, said he is concerned that the size and complexity of Bush's transition council 'could do much more harm than good,' in part by creating extra layers of bureaucracy.
"'My view is that it's pretty a much restatement of what presidents have historically always done, but it's longer,' Light said of the order. 'Basically it says if you want some help, you can call us. . . . But it also creates a lot of bureaucracy.'"
Steven Lee Myers writes in the New York Times: "An administration official said Mr. Bush had repeatedly raised the question of transition in staff meetings in light of national-security threats. The official noted that the Madrid bombings in 2004 took place just days before national elections in Spain."Spying Watch
Greg Miller writes in the Los Angeles Times: "U.S. intelligence analysts eavesdropped on personal calls between Americans overseas and their families back home and monitored the communications of workers with the Red Cross and other humanitarian organizations, according to two military linguists involved in U.S. surveillance programs.
"The accounts are the most detailed to date to challenge the assertions of President Bush, CIA Director Michael V. Hayden and other administration officials that the government's controversial overseas wiretapping activities have been carefully monitored to prevent abuse and invasion of U.S. citizens' privacy.
Here's an excerpt from Brian Ross's interview with Adrienne Kinne, one of the two linguists who went public.
Ross: "But the law's very specific, and President Bush has reassured Americans again and again."
Ross plays a clip from a 2006 Bush speech: "It's a phone call of an al Qaeda, known al Qaeda suspect making a phone call into the United States."
Kinne: "Well, I would say that that is completely a lie. I would call it a lie because we were definitely listening to Americans who had nothing to do with terrorism."
Justin Rood writes for ABC News about the reaction from administration critics: "'This outrageous episode is a reminder that government spying powers can be used to invade the most intimate thoughts of even the most trustworthy people,' noted Lisa Graves of the Center for National Security Studies, and a former Justice Department official.
"'Today's report is an indictment not only of the Bush administration, but of all of those political leaders, Democratic and Republican, who have been saying that the executive branch can be trusted with surveillance powers that are essentially unchecked,' charged Jameel Jaffer, director of the national security program at the American Civil Liberties Union.
"'When they say trust us, we're not listening in on Americans -- this shows that they are,' said Jennifer Granick of the San Francisco-based Electronic Frontier Foundation (EFF). Her group is suing the federal government to stop warrantless eavesdropping programs and hold government officials accountable. 'This should be of concern to everybody.'"
Supporters of warrantless wiretapping have argued that the public should trust government eavesdroppers to follow minimization rules. As Scott Shane writes in the New York Times: "Under so-called minimization rules, an eavesdropper who inadvertently picks up an American's private call is required to cut off the monitoring immediately and not to transcribe or keep a recording of the call."
Joby Warrick writes in The Washington Post: "The chairman of the Senate intelligence committee is looking into allegations that a U.S. spy agency improperly eavesdropped on the phone calls of hundreds of Americans overseas, including aid workers and U.S. military personnel talking to their spouses at home."
Glenn Greenwald blogs for Salon: "There is one reason and one reason only these abuses occurred: because George Bush broke the law -- committed felonies -- by ordering the NSA to eavesdrop on Americans without warrants. . . .
"None of these revelations of abuse is even remotely surprising, and anyone who feigns surprise -- in the administration, in Congress, in the media -- is simply lying to conceal their own culpability. Since the Church Committee, we have known that the U.S. Government, no matter which party is in control, will inevitably abuse eavesdropping powers if those powers can be exercised in secret and without oversight. The temptation to abuse eavesdropping powers is too great to be resisted. That was why [the Foreign Intelligence Surveillance Act] was enacted -- because judicial oversight is the only way to prevent that abuse. Abuse of this sort is inevitable when a Government is allowed to spy on its own citizens without checks and oversight."Afghanistan Watch
Eric Schmitt writes in the New York Times: "With security and economic conditions in Afghanistan already in dire straits, the chairman of the Joint Chiefs of Staff said Thursday that the situation there would probably only worsen next year."Abramoff & Friends Watch
Cary O'Reilly writes for Bloomberg: "Former White House official David H. Safavian was indicted again on charges of obstruction and making false statements in an investigation into his dealings with ex-lobbyist Jack Abramoff.
"In June, a U.S. appeals court overturned Safavian's June 2006 conviction on charges of lying and obstructing justice and ordered a new trial. The new indictment by a federal grand jury in Washington charges Safavian with one count of obstructing justice and four counts of making false statements to investigators and the U.S. Senate. . . .
"Safavian, 41, is charged with hiding his efforts to help Abramoff win government business while he was deputy chief of staff at the General Services Administration. . . .
"Safavian left the GSA after getting an appointment from President George W. Bush to the Office of Management and Budget. He served as the government's top procurement officer until September 2005, when he resigned several days before his arrest."Campaign Watch
From Esquire's endorsement of Democratic presidential candidate Barack Obama: "History demands that this election be a referendum on the Bush years. . . .
"Bushism must be ripped out, root and branch, everywhere it has been established, or else the presidential election of 2008 is a worthless exercise in futility. Barack Obama may not be the man to do it, but John McCain, for all his laudable qualities, clearly is neither willing nor able to do so."Froomkin Watch
Happy Columbus Day weekend. The column will resume on Tuesday.Late Night Humor
Stephen Colbert interviews Oliver Stone about his new Bush movie, "W". "Why didn't you actually have George W. Bush do the part?" Colbert asks. "He seems to have a lot of time on his hands these days. He's just kind of kicking around the West Wing."Cartoon Watch