Unlike similar crashes in 2009, 2008, 9/11, the Tech Wreck, and earlier, my phone wasn't ringing. Now, keep in mind that I'm a Wall Street lawyer who represents both investors and the industry. In years past, on a day like August 4th, I got lots of phone calls from folks seeking something from me - solace, calming words, bankruptcy advice, whatever. After a recent string of days of three-digit drops, I expected that panic would have set in by mid-day today.
Oddly, panic is just not what's out there. It's a very eerie calm. It's as if everyone has been expecting this sell-off and is now receiving it with an icy stare at the television or computer screen (or, in some cases, at the now blank screen - the overload of the Information Age has spawned the reaction of simply turning it all off and going dark). Perhaps it's the been-there-done-that acceptance of too many investors and professional traders who endured the Great Recession's devastating gyrations and have become too burned out to emotionally process today's blow-out.
No Political Urgency
Then there's the other anomaly.
Where the hell are our political and financial leaders? Where the hell are those folks who are charged with setting the economic policy of our nation? Hello . . . anybody home? Anybody there?
We elected Barack Obama as President of the United States a few years back, but, frankly, he's become more of a spectral presence that a political power. Last I heard, he was either celebrating his birthday or trying to raise campaign contributions for the upcoming election. What I haven't heard from him is his plan - or even a plan - for substantively and comprehensively getting folks back to work and restoring consumer confidence. Our President seems quite good at wagging a chastising finger or calling for 11th hour meetings, but I just haven't heard from his own mouth the four corners of anything that I can identify as the Obama Economic Recovery Plan.
Moreover, our economy remains on life support and Congress is on vacation. Seriously? On vacation? You folks don't think that you have a ton of work to tackle? You think that you just accomplished something with the deficit reduction vote? Let me clue you in: You kicked the damn can down the road and, in so doing, twisted the guts of your fellow Americans with disgraceful political brinkmanship.
What you didn't do is forge a plan to put millions of unemployed back to work. You didn't propose steps to unfreeze the frozen credit pipeline. You didn't do jack to restore the confidence of antsy consumers and unsure entrepreneurs.
By the way, that's not really my opinion - the stock market voted on August 4th on your failures as well as your political and financial counterparts' in Europe. Frankly, it's just not a banner day for Western Civilization.
As for the upcoming 2012 election, I think it's high time for an historic national referendum. I've lost all confidence in Congress to make the right choices on anything. Maybe it's time to let the voting public make this tough call.
I'd like to see four economic proposals to the electorate. The first three initiatives should come from the Democratic Party, the Republican Party, and the Tea Party. You'll pardon my skepticism if I tell you that I'm not really expecting anything meritorious from those quarters. Those three parties have had quite a bit of time to cobble together a written proposal with details. Instead we have talking points and potshots. We have broad gestures and a blank paint-by-numbers illustration.
Oh, how I would love to see the emergence of a national reconciliation party - a fourth presence in American politics. And from that fourth corner of the political spectrum I don't want the childishness of dress-up latter-day faux patriots or the doctrinaire party line of the left. I want a single, credible, cohesive, pragmatic proposal for getting our economy back on tracks. Set aside partisan bickering for the goal of preserving my life's savings - whatever is left of that.
After I wrote much of the above on August 4th, the market closed down over 500 points and, frankly, virtually everyone was expecting flat to lousy employment numbers on Friday, August 5th - we all went to sleep on Thursday expecting a drop of hundreds of points the next day. That was a certainty. However, as "certainty" on Wall Street goes, we were greeted with a modestly positive surprise in the employment data. No one really saw that coming. Licking our chops as the futures pointed as high as a 160 point open, we watched that "certainty" evaporate into a nearly 200 point drop during the early trading hours. Oddly, as if to prove that no one who knew anything knew anything, we wound up closing some 60 points on the upside.
Which proves that about the only thing certain about "certainty" on Wall Street is that it's certainly not certain.
Alas, elation and salvation in the stock market ain't what it used to be. Unplugging from our jobs on Friday, many of us ventured home with some relief. The world had not ended. Even if it had been a rough couple of weeks in the markets, we seemed to be skidding sideways rather than plummeting down by the weekend. At least a chance to go home, take a deep breath, and enjoy rather than fret through the weekend.
Then those S&P bastards decided that Friday evening would be a wonderful time to rip out our guts.
Not that the downgrade wasn't warranted - that's not the point.
The question is whether the timing was appropriate. What had truly changed by Friday that was not readily apparent during the week or last week or during the dysfunctional past few years? As with so much that bedevils us in recent times, the same S&P that dawdled about lowering its ratings on a whole host of stocks and bonds until they had thudded to earth, now decided that screwing us all over on a Friday evening was just fine.
Regardless, the deed is done.
We will awake to Monday's stock markets with no substantive change in terms of the economic and financial realities that existed before the close on Friday. We will greet the 9:30 am open with the same idiots in Congress, the same aloof President in the White House, and the same uncoordinated international response to a worldwide financial crisis. The only difference is that S&P now deems the U.S. to be AA+ rather than AAA.
In the mid-19th Century, the United States saw the rise and fall of the Know Nothing party. In 2011, we witness the rise of the No Nothing movement, whose motto seems to be a "No" for everything and "Nothing" in terms of a workable solution that a majority of Americans will support. In the face of such intransigence, we have drafted deadlock, ideology, and dogma in lieu of pragmatic legislation.
I don't trust the political hacks from the Republican and Democratic parties to get this right - I simply trust that each elected official will persist in advancing partisan politics at the expense of our country's best interests. Similarly, I have no hope for anything meaningful from the Tea Party. Petulance is not a strategy for restoring the United States' full faith and credit. Last I looked, the nation's motto was E Pluribus Unum, not I Told You So.
As such, I renew with vigor my call for a national referendum on the future economic policies of our nation. Instead of appointing Congressional committees populated with partisan politicians, I would prefer that the Republican, Democratic, and Tea parties draft their specific versions of comprehensive economic reform legislation. I would then welcome the preparation of additional drafts with competing plans. For my part, I would urge serious citizens such as New York City Mayor Michael Bloomberg to become actively engaged in drafting competing plans.
Let us then submit those proposals to a popular vote with the requirement that the two plans receiving the most votes after a primary-type ballot would then be ultimately submitted to the American public for a vote within, say, 90 days. During that interim, Congress would be welcome to draft a super-majority counter-plan that would be listed on the same final ballot. It would be an interesting challenge to the House and Senate to see if they can forge a single piece of legislation that the public will support.
If Congress can't reach a bicameral super-majority for its own effort, then the resulting referendum would be a choice between the two plans that won the earlier primary. Whatever plan is ultimately approved by the largest number of votes would be promulgated into law. Once again, we will draw the Travis line in the sand of American politics. All Americans would then have a moral obligation to unite behind the legislation and see that it is timely implemented.
Okay, maybe not a perfect suggestion or even a great idea but, hey, I'm putting it out there to generate discussion and debate. Please, feel free to comment and add additional suggestions or options.
As Woody Allen Said
Right now, we're astride a crossroads. We can't move in four directions. Time to pick one. All of which puts me in mind of that wonderful quote from Woody Allen:
More than any other time in history, mankind faces a crossroads. One path leads to despair and utter hopelessness. The other, to total extinction. Let us pray we have the wisdom to choose correctly.