It’s a frightening thing to contemplate without illusion; the U.S. will indeed see change. Yet many cling to the pretense that we are still masters of the change.
Poll swings aside here or there, this is what we get:
Mr Obama released a two-minute advert – four times the length of most campaign commercials – in which he set out his plans to deal with the financial crisis. He pledged to “give a $1,000 tax break to the middle class… end the ‘anything goes’ culture on Wall Street with real regulation… free [America] from our dependence on Mid-East oil in 10 years… crack down on lobbyists… and… bring a responsible end to this war in Iraq so we stop spending billions each month rebuilding their country when we should be rebuilding ours”.
Mr McCain, in his campaign ad, vowed to “reform Wall Street and fix Washington”, stressing that he had “taken on tougher guys than this before”.
That’s it. Taking on tough guys. Wiring Bud Fox to trap Gordon Gecko. Or the Boy King’s ‘Come Home, America’ — except he and those around him such as Zbig et al. know that an Iraq wind down will still take years and financial commitments will remain regardless. Like the ephemeral and ultimately worthless derivatives and leveraged debt, so to our ‘leaders’.
Paulson and Bernanke at least understand the interlocking systemic dynamics while attempting even a controlled crash landing of an orderly market clearing solution. As we all know, essentially the Fed and Treasury are seizing direct control of the ‘commanding heights’ of the U.S. money economy. Still, one should not panic. Nancy Pelosi is sending Barney Frank on a ‘fact finding mission’.
What we are witnessing may be the greatest destruction of financial wealth that the world has ever seen — paper losses measured in the trillions of dollars. Corporate wealth. Oil wealth. Real estate wealth. Bank wealth. Private equity wealth. Hedge fund wealth. Pension wealth. It’s a painful reminder that, when you strip away all the complexity and trappings from the magnificent new global infrastructure, finance is still a confidence game — and once the confidence goes, there’s no telling when the selling will stop.
But more than psychology is involved here. What is really going on, at the most fundamental level, is that the United States is in the process of being forced by its foreign creditors to begin living within its means.
That last sentence is the crux. The Warlord’s reign demonstrated the thin veneer of liberal democracy. We all know the Movement’s radicalism. What remains untapped is the radical energy and potential of the politically disinterested ‘consumer class’. Today fear and unease over poorly understood, complex and technical financial instruments impose a sense of shock and dismay. Empty bromides from both candidates in an odd way help maintain the quiescence. That likely will soon give way to deep, unfocused anger and resentment.
When does ‘change’ segue into something more? When does it cross the line into a more profound political morphology? This door we believe now is at least unlocked. Still shut. What it will take to open it and when is more unknown than the September market trajectory.
The American financial model is over. Moreover, we are no longer masters in our own house. When that brutal and unforgiving reality sinks in culturally, politically and personally, then what?