Everything in Moderation? Not Quite

Sep 21 2001

OPINION Ten days ago I rolled out of bed and called my buddy at Morgan Stanley for the morning color. "Things are going to be a little strange this morning," he said. "Seems like two airplanes have hit the World Trade Center Towers."

I was so naive. When he told me that, and I turned on the TV to watch the situation develop, it took quite a while before it dawned on me that this was anything more than a weird accident. And now, just ten days later, our nation has a Department of Terrorism.

Watching the market sink steadily every day so far this week, as the enormity of it all has dawned on all of us, in some ways I'm very glad that the only "do something" that our government has done these last ten days is whip up a new cabinet department. But in other ways, I'm disappointed that more "do somethings" haven't been done by now. I think the market is equally ambivalent.

On the plus side, we are taking our time to investigate who is responsible for the attacks and to develop military and diplomatic options. President George Bush has come far since Monday's "Osama Bin Laden dead or alive" chest-pounding to arrive at last night's more thoughtful vision of a war on terrorism, with frequent reminders that this is not a war on Muslims or on the Islamic religion. In my view he still has a long way to go before he starts addressing the deep-seated political roots of terrorism - but it's a great comfort to see that he is not rushing headlong into a nuclear strike aimed at creating Lake Afghanistan.

Bush's choice of Pennsylvania Governor Tom Ridge to head the new Office of Homeland Security fits in with this moderate approach. Jude Wanniski, the Republican insider who runs the influential political economics consulting firm Polyconomics, sees the Ridge appointment as a key move in the battle within the Bush administration between Donald Rumsfeld's hawks in the Department of Defense and Colin Powell's doves in the Department of State.

After Bush announced Ridge's appointment Thursday night Wanniski told clients, "This is a huge setback for the Pentagon warriors who want to go to war against Islam. Ridge was blocked by the right wing of the GOP as Bush's running mate, supposedly because he is "pro-choice," but in reality because he is a diplomat, not a warrior, a "peacenik" if you will. There was considerable hot rhetoric from the President about the Taliban, but the bottom line is that Colin Powell has been given key support in the Cabinet with Ridge."

Moderation is a wonderful thing when it applies to the prospect of nuking the 1.2 billion Muslim souls who share this world with us. But "everything in moderation" isn't the right approach for economic matters in this time of crisis. Go slow on the military/diplomatic front - but when it comes to saving the domestic economy, let's open this baby up and see how fast she'll go!

For example, let's stop debating exactly how the federal government is going to bail out the airlines. Look, they're so heavily regulated and unionized - and unprofitable - already, they might as well be government agencies. And in the last ten days the government has effectively seized them as part of a war effort. So just give American and United and whomever else whatever they need to keep flying, and worry about the details later. This isn't stem cells, George. Just do it!

But that wasn't the mood from the parade of big shots who testified Thursday before the Senate Banking Committee. There were lots of tears for the dead, praise for the patriots, and self-congratulation for getting the markets open so quickly. But if anything like a sense of urgency came from Alan Greenspan, Paul O'Neill or anyone else Thursday, I missed it. That senatorial time would have been spent much more constructively slashing capital gains taxes, bailing out the airlines, and talking about new ways to stabilize the purchasing power of the dollar.

The market sank all day Thursday as our economy's leaders testified while Rome burned. Now maybe it’ll rally a little Friday in relief that, at least, George Bush is pulling back from burning everything else.