The Engine of Mayhem
Posted in Main Blog (All Posts) on October 14th, 2008 4:28 am by HL
The Engine of Mayhem
WASHINGTON — It’s easy to explain the continuing financial chaos — and the failure of governments to control it — as the triumph of psychology. Fear reigns, and panic follows. Everyone dumps stocks, because everyone believes that everyone else will sell. Only rapidly falling prices attract sufficient buyers. All this is true. But it ignores the real engine of mayhem: “deleveraging.” That’s economic shorthand for purging the financial system of too much debt. Just how this “deleveraging” proceeds will largely determine the fate, for good or ill, of the present crisis. The turmoil has already moved beyond “subprime mortgages,” which (it now seems) merely exposed widespread financial failings. These were global, not just American, and their pervasiveness explains why leaders of the major economies have struggled, so far unsuccessfully, to fashion a common response.
Jumping Ship…
This is becoming a very strange campaign. On CNN last evening both David Gergen and Ed Rollins echoed the current mantra that the “old” noble McCain is gone-and a “new” nastier one has emerged, largely because of his attacks on Ayers, perhaps his planned future ads on Wright, and a few unhinged people shouting at his campaign stops. Recently Christopher Buckley endorsed Obama, likewise lamenting the loss of the old noble McCain. New York Times columnist David Brooks dubbed Palin a “cancer,” and he suggested that Obama’s instant recall of Niehbuhr sent a tingle up his leg as Obama once did to Chris Matthews as well.
