Op-Ed: Poll shows 81 per cent of Americans think U.S. is going the wrong way

Turns out most Americans can agree about something, after all. A New York Times/CBS poll has shown an almost universal dissatisfaction with the country’s direction. That’s unusual, given the left/right screaming match over the last few years.

It’s almost as if reality has acquired some sort of meaning. The New York Times, which has maddeningly left the header question out of its multimedia graphic, as far as I can see, reports: “In the poll, 81 percent of respondents said they believed “things have pretty seriously gotten off on the wrong track,” up from 69 percent a year ago and 35 percent in early 2002.

Although the public mood has been darkening since the early days of the war in Iraq, it has taken a new turn for the worse in the last few months, as the economy has seemed to slip into recession. There is now nearly a national consensus that the country faces significant problems.” No, really? Two or three wars, economic earthquakes, housing market crash, credit crunch, trillions of dollars fluttering around like confetti at a canceled wedding, huge deficits, and there’s a problem? With all due respect to Lincoln, I’d say “some of the people” just weren’t listening. Maybe they got deafened by all the useless soap box oratory. 78% of people on both sides of the fence said the country was worse off than five years ago, 4% said it was better off. This is a gem, if you like zircons in your diamond collection: “The poll found that Americans blame government officials for the crisis more than banks or home buyers and other borrowers. Forty percent of respondents said regulators were mostly to blame, while 28 percent named lenders and 14 percent named borrowers.

In assessing possible responses to the mortgage crisis, Americans displayed a populist streak, favoring help for individuals but not for financial institutions. A clear majority said they did not want the government to lend a hand to banks, even if the measures would help limit the depth of a recession.” The US financial market is relatively unregulated, by the standards of just about every other advanced economy, under current US law. In just about any other country on Earth, at least any English speaking country, the people who allowed those mortgage securities to be used as collateral after they lost so much value would be in jail. Not in America. The debate now is whether it should be regulated, and how. The Fed, like central banks around the world, has now been bailing out the US market for several months. The ridiculously low interest rates on Federal Reserve loans are a form of subsidy to help cover borrowings by the financial institutions. If this poll demonstrates the knowledge base from which the US public is working, it’s not a pretty sight. Nobody, not even the financial institutions themselves, and the media, has ever claimed there was any government involvement in the subprimes, the housing bust, the credit crunch or the crash of the equity markets and the meltdown of so many big corporates. Even the Democrats haven’t accused the administration of involvement in the debacle, just not doing enough, fast enough, about the crisis. Corporate America runs its own show, and usually objects loudly to any government involvement or regulation. As for letting the banks and other institutions bail themselves out, anyone who’s read a newspaper or seen a financial page lately will have noticed that’s just not going to happen, because it can’t. The week before it found itself technically insolvent, Bear Stearns had about $18.1 billion in assets on hand. The next week it took the Fed and most of America’s leading financial corporations, combined, to put something together to save the couple of trillion dollars in business which was hanging over the market’s head. Unless Middle America is in a real hurry to see its banks going the same way, and its 401ks and other investments getting wiped out, a bailout is about all that’s available, unless you expect an awful lot out of Get Well Soon cards. “Limiting a recession” would be a euphemism at best. The banks can’t do business if their lenders and borrowers are trying to get payments from other institutions that just don’t have the money. Bear Stearns went down because it couldn’t meet its obligations. To stay in business, the banks have to borrow, and the only source big enough to lend on this scale is the Fed. (Just for the record, since the matter was raised in a previous thread, the Fed is deemed to be the lender of the last resort by its charter and role in the banking system. That gives it the legal power to bail out banks.) This poll reads like a lot of people saying “This can’t be happening, who’s responsible?” as the city burns down. There’s a point where denial doesn’t work any more, and even illiteracy and mindless, unproductive, partisan politics won’t help. In the old Disney movies, there’s be a part where Old Gramps would get up and address the town, and shame them into doing the right thing. This isn’t that part of the movie. This is the end credits, where what you need is someone who’s really good with a spreadsheet to keep the movie on budget, if anyone expects to get paid. Of course the economic mythology and distortions of history continue to fester in the debate about Federal intervention in the financial markets. The theory is that the Free Market, like the Tooth Fairy, can fix everything, according to people who are still trying to unravel the New Deal. The Free Market, as expounded by Ayn Rand, Milton Friedman, and others, despite some rumors to the contrary, was built on an economy founded by Keynes and Roosevelt. Its predecessor, the pre 1929 descendant of the Robber Barons, died jumping out of windows. The Free Market didn't "fix" the Depression. It reincarnated itself after World War Two, on public money and Baby Boom economic forces. Let's see one Free Market Advocate who's prepared to lend a cent to anyone, at anything less than retail rates. One way or another, this is history in the making.