I’ve been reading several commentaries drawing parallels between Bush’s old request from Congress to provide his first Alpha Male (“Rummy”) with an authority to attack Iraq and his new request that Congress allow his new Alpha Male (“Hank”) to spend US 700 billion — probably US 1 trillion — for bailing-out Wall Street.
The parallels between 9/11 and 9/15 (the day Lehman Brothers died) become quite instructive when one considers the policies pursued by Washington that brought about these two disasters. In the pre-9/11 era, both Republican and Democratic Administrations attempted to establish an American hegemony in the Middle East — but without preparing for the eventuality that anti-status-quo players in the Middle East, including terrorist groups would try to challenge U.S. power. Al Qaeda ended-up ravaging the foundations of this cost-free Pax Americana with major costs for U.S. global status.
In the pre-9/15 period, the same administrations may have promoted a free-market agenda by de-regulating the financial markets, including by getting rid of the Steagall Glass Act and by reducing federal oversight. But through the Fed, Washington continued to inject easy money after 2001 into the economy which helped drive the financial and housing bubbles. And through Fannie Mae and Freddie Mac, the semi-private huge mortgage companies that enjoyed government subsidies and guidance, Washington was encouraging consumers to buy homes they couldn’t afford. In simple terms, Washington removed oversight and regulation from the financial markets – while allowing the government to create incentives for financial irresponsibility.
Then there are the intelligence agencies that had failed to warn of the terrorists planning to attack America and that the rating agencies had failed to warn of the problems facing the big financial houses, shocking examples of bureaucratic and business malfunctions.
And finally, the Bush Administration’s responses:After 9/11, a failed and costly invasion in Iraq that helped weaken U.S. strategic position in the region and to create more anti-Americanism. After 9/15, a series of bailouts that encouraged financial companies to continue pursuing irresponsible policies and using monetary and fiscal policies to encourage American to spend. And now with the “surge” in Iraq and the “spurge” that King Paulson will be doing in Wall Street creating the impression that the Middle East and the financial crisis are “under control.”
In the long run, only structural changes – a reassessment of U.S. strategic and economic policies would – would make it possible to readjust U.S. military and economic power to the new global realities.