“Houston, We Have a (Political) Problem”
One of the very best pieces I’ve read — out of perhaps thousands now — analyzing the ongoing financial melt-down is “The Quiet Coup,” by Simon Johnson. The article appears in the May issue of The Atlantic magazine.
Johnson, a former chief economist of The International Monetary Fund, has a “good news, (very) bad news” take on things.
The good (and surprising) news is that the financial crisis facing the U.S. isn’t unique, and that similar crises have been successfully navigated by many other countries previously. In fact, precisely because of other countries’ experience, there is a clear consensus about what to do (you can read the article for the details, but I’ll give you a hint: it’s nothing like the plan cooked up by Treasury Secretary Tim Geithner).
Un-do the Coup
The bad news is, whether or not a stricken country takes the necessary economic medicine is ultimately a political issue. In other words, does the country have the will to do what’s necessary?
On that score, Johnson is decidedly pessimistic, because he’s dubious that Wall Street will prescribe or take medicine that “gores its ox” — and it is Wall Street that controls the decision-making apparatus.
The very bad news? He speculates that things may actually have to get much worse before interests hostile to Wall Street wrest back control (“un-do the coup??”).
Here’s hoping he’s wrong . . .