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Bailout Politics
Many an American politician is spending the holidays plotting how best to take advantage of any slip in the U.S.-orchestrated IMF bailouts, and at the slightest sign of advantage will be ready with a helping banana peel.
Here follows a decoding device: a means of detecting the pols and pundits who are trying to profiteer on Asian trouble, and separating them from those making a statesmanlike effort to avoid a Millenium Depression (there are a few statesmen left; and I mean no scaremongering: absent the IMF efforts these last few months, a depression is exactly what we'd get).
The bailout-opposing profiteers come in two distinct packages. They are the usual suspects from left and right political wings, but whenever high finance is at issue, they take considerable pains at camouflage, and act in peculiar concord.
The left-leaning group is descended from the agrarian, egalitarian, anti-market, anti-bank, anti-money Populists (late in the last century, early in this one). Many today fancy themselves "Progressives".
At the opposite end, the right-leaning bunch would be comfortable at dinner with any turn of the century Robber Baron, the Populists' arch-enemy. Today's laissez-faire equivalents have no handy tag: all are Republicans, but so are most bailout proponents. These free marketeers should be known by their automatic advice for any person, family, corporation, or nation in financial distress: "Pull the plug!" So, Plugpullers they shall be.
How do you tell one from the other, and the two from statesmen?
Code words and fellow travelers.
Any mention of a "heavy-handed" or "misguided" IMF, or suggestion that excess production capacity should be solved by higher wages, and you're certain to have a Progressive on your hands. Molly Ivins finished a piece titled "How to Save the Global Economy" with "...there is a better way to do this -- by stimulating growth and wages while nations clean up their bad debts." It's a very old, sure fire Progressive prescription, in camouflage: print money and raise taxes.
Tip-off Progressive quotables and pols: William Greider (great reporter, bad thinker), Lester Thurow ("Zero Sum Society" author, mercifully cloistered at MIT), Jeffrey Sachs (late savior of the Russian economy, safely returned to Harvard); Dick Gebhardt, Paul Wellstone.
The Plugpullers are more pernicious, if only because there are more of them, for the time being.
Code phrases: markets must be free from any governmental intervention or manipulation; and unwise investors must always pay the price of their error.
Tip-off source: anything from the Wall Street Journal. Last week: "Are governments like firefighters putting out a blaze even thought the property owner foolishly failed to install sprinklers?" Quotables and pols: Paul Craig Roberts, Jack Kemp, Steve Forbes.
The Progressives despise inconvenient and inexplicable markets, believe that water can and should be made to run uphill, and that anyone advocating downhill flow in spite of instructions should be gagged. In equally deep error, the Plugpullers' list of vile "interventions" includes the Securities and Exchange Commission, the Financial Accounting Standards Board, Bankruptcy Court, the Fed, Social Security, and Lord knows, the IMF.
How much damage can the Progressives and Plugpullers do? They have already conspired to block new funding for the IMF (the Progressives wanted to export American environmental and labor law; the Plugpullers predictably refused any compromise). At the slightest sign that "taxpayer dollars" or "U.S. guarantees" are under discussion -- which may well be necessary if the Japan domino begins to wobble -- look out.
This weird concert of left and right can paralyze the good guys -- Treasury Secretary Robert Rubin in public lead, Alan Greenspan in private charge -- at the worst possible moment.
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