Keep Hope Alive!

This past week, President Clinton advised President Obama to be more hopeful about the economy. Better advice might have been to read The New York Times Sunday magazine piece about the undiagnosed diseases program of the National Institutes of Health, which presents a different paradigm for problem solving than the "blind man feeling the elephant" mode we are in (e.g. fix a bridge).

The media is doing it's job in deconstructing the crisis and assigning blame. Time magazine gives us a list of the 25 People to Blame for the Financial Crisis. In summary,

1. Phil Gramm, US Senate Banking Committee chairman, deregulator
   
2. Chris Cox, SEC chairman, failed to provide oversight
   
3. Angelo Mozilo, predator lender (Countrywide)
   
4. Joe Cassano, AIG exec, issued credit default swaps
   
5. Frank Raines, Fannie Mae CEO, abused position of Government Supported Enterpirse (GSE)
   
6. Kathleen Corbet, Standard & Poor, gave unreliable ratings
   
7. Ian McCarthy, predatory home builder (Beazer Homes)
   
8. Dick Fuld, led Lehman Brothers to failure
   
9. Bernard Madoff, ran fraudulent investment schemes
   
10. Herb and Marion Sandler, predatory lenders (Golden West Financial, World Savings Bank)
    
11. Stan O'Neal, created collateralized debt obligations (Merrill Lynch)
    
12. John Devaney, facilitated predatory loans as a hedge-fund manager
    
13. Sandy Weill, led Citigroup to insolvency
    
14. Jimmy Cayne, led Bear Stearns to failure
    
15. George W. Bush, US President, deregulator
    
16. American Consumers, over borrowed, under saved
    
17. Alan Greenspan, Federal Reserve chairman, deregulator and economic overstimulator
    
18. Hank Paulson, US Treasury Secretary, ineffective policies
    
19. David Lereah, National Association of Realtors economist, promoted housing bubble
    
20. Lew Ranieri, father of mortgage-backed bonds (securitization)
    
21. David Oddsson, Prime Minister of Iceland, led Iceland to bankruptcy
    
22. Fred Goodwin, predatory banker, led Royal Bank of Scotland to insolvency
    
23. Bill Clinton, US President, deregulator and politicized mortgage lending
    
24. Wen Jiabao, supplied US with cheap credit from China
    
25. Burton Jablin, TV programmer, encouraged housing bubble

The list is not "scientific" as it was created by popular vote, but that hardly matters. No matter who is on the list, the point would be same... everyone wanted more, just like Oliver Twist. This list could be easily titled "25 People Who Rose to the Top of their Field".

My favorite post-mortem works so far are Bethany McLean's Vanity Fair piece on Fannie Mae and the CNBC documentary on predatory lending, The House of Cards. As a society, we live and learn, and one must hope that these types of mistakes will not be repeated. We do live by the rule of law, and laws might prevent future tragedies of the economic commons.

So does Obama have reason to be hopeful? Can one be honest about a bleak reality and hopeful at the same time? I say yes, if you look at the world with a perspective that transcends maintenance of America-as-we-know-it. Frank Rich in a NYT opinion piece wrote that

Obama’s toughest political problem may... [be] with an America-in-denial that must hear warning signs repeatedly, for months and sometimes years, before believing the wolf is actually at the door.

But in the same piece he points us towards something hopeful, an America remade.

Writing in the Atlantic, Richard Florida presents a vision of How the Crash Will Reshape America. The world he describes is actually a place I would want to live... highly productive mega-regions, decline of the automobile, smart people being smart together. Home ownership, rather than the American dream, is recast as the bonds that hold you down.

Yes, there is hope, not for pointless attempts to save the doomed, but for nurturing new growth and way people will live in the future.