I know embarrassingly little about banking, but even my ignorant ears perked up a bit yesterday afternoon during President Bush’s press conference when he said (in response to a question about whether or not he thought banks were in trouble) that “Americans should remember that up to $100,000 of their money in the bank is secured by the federal government.” Now, I don’t have $100 grand, nor do I ever expect to have that much money in any bank, but when I heard the President make that remark… well, the only thing I could think of was the “run-on-the-bank” scenes from Mary Poppins and It’s a Wonderful Life. Then, as if to confirm my impending anxiety, the President smiled, nodded, and quipped: “Look, I’m not an economist. I’m an optimist.”
I’m not an economist, either, but whenever Mr.-You’re-Doing-A-Heckuva-Job-Brownie (a.k.a., Mr.-Mission-Accomplished) says that he’s “optimistic” about something, alarm bells go off in my head.
Then, I read this article about the government’s seizure of the bank IndyMac, which predicts that other financial institutions are soon to follow in its wake. (One interesting thing that I learned in that article is that when the government seizes control of a bank ,they call it “conservatorship“– which, as far as I can tell, sounds a lot like what happens in academia when departments go into “receivership.”) Just to pile on a little more to the dread, only this time in a much more close-to-home way, Brian Leiter has recently posted two separate stories about the effects of the economic downturn on the profession of philosophy (“The Brewing Economic Meltdown in the Philosophy Profession” and “Do Senior Faculty Have an Obligation to Retire at Some Point?“).
Things do not look good.
It would be amazing if 8 years of incompetence (even by someone who happily own’s the title “world’s biggest polluter) could destroy the world banking system — but I think that this is an example of a problem that stretches back through the Clinton years and to Bush I (probably beyond but that’s as far back as Idea s Man has paid attention…) To be honest, I’m not sure the conservatorship, or whatever the hell it’s called, isn’t the best place for nebulously public-private institutions like Fannie Mae and Freddie Mac. And we’re told that privatization is supposed to increase the solvency of these sorts of institutions…
Like the Iraq war, however, this is an instance where one can’t feel to o smug in one’s “I told you so’s,” because the cost of our government’s failure is so tremendously high.
People should read this.