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Dear Mr. President:
Here's Your Chance To
Do The Right Thing
Sidney Harris, the late Chicago Sun-Times columnist once said: “A recession is when your neighbor loses his job; a depression is when you lose your job.” So what do you call it when your neighbors have lost their jobs and their homes and their financial futures, Mr. President?
Yes, I know you said we’re not headed for a recession. But let’s be honest: We’re only able to confirm that we’re in a recession after we’re knee-deep in the  middle of it. The generally accepted definition of a recession is “...a decline in the Gross Domestic Product (GDP) for two or more consecutive quarters.” Okay, so as of the date of your press conference on this topic – February 28, 2008 – we weren’t in a recession. Not officially and not yet, anyway.
But what about the concept of anticipating potentially negative future events and taking measures to reduce their impact? We’ve all said “if I knew then what I know now” at some point of our lives. Wouldn’t this be the perfect opportunity to act on what we’ve learned from our nation’s recent history so we don’t have to endure the ugly consequences for doing nothing?
Humor me for just a moment, Mr. President: Forget what your handlers and career bureaucrats are feeding you long enough to look at the indisputable facts:
- Record numbers of Americans will lose their homes in 2008
- We’re paying record prices for gasoline
- Food prices are soaring
- Traditional consumer lending and loss models have been trashed: Instead of saving their homes, distressed homeowners are throwing in the towel and saving their credit cards instead.
- Desperation is running rampant: Americans are more willing than ever to destroy their financial futures and pay the necessary penalties to free up much-needed cash by liquidating their 401Ks, SEPs and IRAs.
- Personal bankruptcy filings are on course to match or set new records
- The FDIC is recruiting retirees with experience “handling insolvent financial institutions” as they begin tooling-up to deal with an estimated 100 bank failures over the next 12 to 24 months. The “voluntary” mortgage-mess marketplace solutions are failing: HopeNow tanked and history will show that its replacement–Project Lifeline–will be equally ineffective.
I know I know I know: You say we’re not in a recession. Yet. But would you agree that if we don’t learn from history’s mistakes, we’re doomed to repeat them?
I witnessed the 1980s Savings and Loan scandal-fueled implosion of the Texas economy first-hand. I watched “funny money” flood the real estate markets, thanks to lax lending rules, and appraisers doing more cooking than a Betty Crocker bake-off.
In 1987, it became apparent to everyone that a government intervention (a/k/a bailout) would be necessary to fix the S&L mess. But the “We’re not going to bailout reckless lenders, investors and speculators!” battle cry delayed the Reagan Administration from taking action and approving the $16 billion necessary to clean it up.
Instead, your father seized control of the mess he inherited from the previous administration. He bit the bullet and signed off on a bailout that ended up costing taxpayers $160 billion for a problem which could have been remedied for one-tenth of the cost if our nation’s leaders had swallowed hard and taken the hit just four years earlier.
What sort of legacy do you want to leave behind, Mr. Bush? You are in the perfect position to do what is in the best interest of our nation right now. You’re in the home-stretch of your final term. At this stage of your career, no one can hurt you politically. But if you fail to act, your delay will cause irreversible damage to tens of millions of Americans who are
d-r-o-w-n-i-n-g.
Today’s price tag to fix the real estate debacle is approaching $1 trillion. Yes, I know it’s a huge number. But we need to focus on the fix and not wring our hands, point fingers and place blame as to how we got here. There will be plenty of time for the requisite hearings and grandstanding before Congress after the dust from the upcoming election has settled. Let the lawyers and lawmakers revamp the rules so we’ll be able to move forward until the next national financial scandal which will undoubtedly surface 20 years from now.
I ask you to do the right thing, the bold thing, the very “Texan” thing and take aggressive action now to stop the bleeding and save the patients: Your fellow Americans. If you refuse, then fixing the mess will end up on your successor’s watch. Which leads me to ask the obvious: What will the “procrastination premium” for failing to act swiftly eventually cost our nation? How much financial pain are we willing to take a few years from now?
Even more disconcerting, Mr. President, is the enormous price of procrastination that won’t show up on any official balance sheet.
It’s well known that money troubles are always one of the most destructive and common reasons why marriages end in divorce. Right now, families are being destroyed by negative factors that always reveal themselves during these sad cycles. Alcoholism, drug and physical abuse numbers rise. Children are displaced. And now we can add a new victim to this downward spiral: The family pet. Do you have any idea how many pets are being abandoned by displaced families? Many are left to die in foreclosed homes by distraught evictees. The lucky ones are flooding animal shelters, pushing those already over-stressed resources to new limits.
The long-term damage to the psyche of future generations of Americans is clearly at risk. Mark my words, the true cost of this real estate-fueled credit market disaster will exponentially exceed whatever dollar amount it costs to fix the problem today. Seize control of this situation, Mr. President, and chart a course of recovery during the last year of your presidency. History will properly smile upon the courage it took for you to do the right thing for the country we all love.
 Listen to the podcast version of this "Letter to the President" by clicking here.
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