My preliminary account of the Bush Legacy (yesterday) did not really include the recent economic meltdown. That meltdown was not Bush's fault, but his appointee, Alan Greenspan, certainly bears some responsibility. Steve Forbes tells the tale in his column in the November 17 Forbes. The worst misjudgment was "regarding the integrity of the dollar. Greenspan treated it like a yo-yo. The dollar is the world's principal currency, and its instability has wreaked havoc."
Forbes points out that the "real price of oil" is not necessarily higher than it was five years ago. "On paper oil does look higher, despite its recent tumble from the summer's peaks. But consider this: In 2003, when oil was $25 to $28 per barrel, an ounce of gold bought 12 barrels. Today, with oil at $65 to $70, an ounce of gold buys about 11 barrels."
Forbes, in a companion editorial on Henry Paulson, faults him, too, for "his support of the Fed's weak-dollar policy," along with his "refusal to modify the mark-to-market rule that was gratuitously destroying the balance sheets of banks and insurance companies."
The whole awful story of the stock market collapse will employ a number of able writers in the months and years ahead. Meanwhile, we must deal with a potential follow up catastrophe: a new Congress and (likely) President that think that higher taxes on business and investment is the way to get the country out of a recession.
There is a grim fascination these days with stories about the Depression of the '30s and how it really developed and continued for a full decade.
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