Bush Legacy

Fannie Mae and Freddy Mac are two corporations that were established by the American government under FDR to make loans to ordinary people so that they could buy homes. They were made necessary because other lenders were often reluctant to make loans to low income and first-time homebuyers. They were established to help fulfill the America dream of being an ownership society. But lately they have been in the news because of the financial meltdown brought on by the bursting of the housing 'bubble' in the US. These two corporations were seriously ensnared in it and have subsequently been nationalized and propped up with taxpayers’ money, because they were unable to survive on their own. I understand, though, that George Bush wanted to reform these institutions in 2006 but was prevent by a Democratic Congress.

Yes, Bush was stopped from reforming Fannie and Freddie. But how serious was he about reforming them? He put party cronies in charge to run those agencies. They were Bush loyalist, but poor administrators, a norm for his administration. This kind of cronyism set the tone for further financial calamities during his term.

Perhaps I don't have it quite right. Kevin Hassett of Bloomberge.com News wrote how the Democrats created the financial crisis by not supporting reform legislation for Fannie and Freddy. But his analysis sounded a bit like a parable that evokes the-barn-door-being-closed-after-the-horse-has-left. Even Kevin Phillips, author of “Bad Money’”, who is more knowledgeable about the origins of the present financial crises, doesn’t make such an indictment. He spreads the blame on many decisions and events, while Hassett’s explanation is just too pat and simple. The Democrats, in voting against reform for Fannie and Freddy, probably did exacerbate the problem, like many other decisions before. But Democrats alone didn’t create the problem. No, the seeds of this financial crisis were sown by many players over many years.

Phillips is a Republican. He foretold the rise of conservatism in America. But in his laying blame for the financial crisis he doesn’t make it a partisan witch hunt, like Hassett does, who is quite partisan and narrow in his criticism and finger pointing. 

If Bush really had wanted to reform those agencies he would have put reformers in charge, to reform things from inside. Instead he gave the jobs to party loyalists. Under those circumstances it's lucky Bush was stopped from reforming and privatizing Social Security, as he desperately wanted to. Image what an additional catastrophe it would have been if Social Security were connected to the performance of the stock market, as Bush wanted?

In a way I think it is fitting that George Bush is ending his tenure on this note, with one of the greatest financial debacles in American history. It is the crowning achievement for his abysmal presidency. Sadly, though, there's still time for him to screw things up.

I wish Milton Friedman were alive today to comment on recent events because of the free marketeer that he was. I am glade the financial meltdown occurred because it has helped put an end to a fallacy that Friedman supported, that the free market is the be-all and end-all. It also puts an end to the Reagan fallacy that government is the problem and not the solution. If one makes it a self-fulfilling prophecy as Bush did, with his neglect and incompetence as a manager, then government is the problem.

It is ironic that Bush was the first president with a MBA (Master of Business Administration). Just goes to show you that strictly MBA holders are not always the smartest people in the room. In Bush's case a MBA was a very hollow achievement, like most of his achievements. He should have also educated himself in other areas, like history and geography.

In the last few months Bush has been looking shell-shocked, like he did after 9/11. It's good that he has recruited grown-ups to look after this crisis, people who are trying to clean up the financial mess he helped create by not enforcing the financial regulations that were on the books.

Thanks to George Bush and his brand of conservatism America has become less influential in the world, and less relevant. When Bush started his presidency I sensed that he would drive America and the world into a state of despair. Low and behold he has. He said he was a uniter, not a divider. However, in most of his dealings he has been a divider and a very divisive president. Ironically, though, this one time, with the financial crisis he helped create, he has united not only America in economic pain but also the world.

When the reality of financial crisis was really beginning to become apparent it is said that Washington DC took on the feeling of a wartime capital, like it did after 9/11, because legislators were feeling shell-shocked by the magnitude and cost of the financial mess America was in. I found this interesting because of Bush's self-proclamation that he was a War President, fighting a ‘war on terror’. But he didn't expect to be this kind of war president, fighting a financial war. However, most of the time as War President, in both cases, he has acted like Don Quixote, tilting-at-windmills.