Sunday, May 24, 2009

The Bush Legacy, Memorial Day 2009

Ever notice how in the last year of the second term of a presidency voices are raised in speculation about the hallowed legacy that the incumbent soon to be departed will leave behind? The fund raising machine is cranked up one last time for the benefit of an ever more grandiosie presidential library and respectful columns written about His concern for His legacy dominating His remaining waking hours of Power.

Well, it's Memorial Day Weekend, time to consider legacies and such, even if we haven't heard too much about the Bush legacy recently. Dick Cheny is out there defending torture, the invasion of Iraq and various other crimes and mistakes, to what purpose I know not. But as to the legacy, all is quiet on that front (apologies to Erich Maria Remarque, another good Memorial Day read, in any country, though he wrote as a German after the Great War).

Perhaps there won't be one. Perhaps we will simply roll it all back to 2000. I think that right now if you gave people that choice, without much thought, they'd grab it. In retrospect, most of the 'productivity' gains of the last eight years resulted from 'innovations' in the financial services sector, and just about everyone would like to pretend like that never happened. So, take her back to 2000, skipper.

Well, there is a little problem with that. If you take house prices back to 2000 (not that far really), house prices have to fall roughly another 30% (nation-wide, based on the Case Shiller index, peak to trough), or as far again as they've already fallen (a bit worse that the more adverse scenario of the recently completed stress test exercise). Awful, but in the ballpark of people's tolerable reality dosage. The real horror would be in taking levels of economic activity back to that level. If you reverse 8 years of 2.2% annual economic growth, you drop the standard of living by some 15-16%. That is not quite a Depression Era level of readjustment, but it's far worse than anything since World War II in the United States.

That prospect exceeds the dosage of any tolerable reality check. But, it's a distinct possiblity, if not already baked in. Kinda leaves a guy wondering where the recent stock market rally came from (not that I'm betting against it continuing).

Of course, the Clinton Legacy was Bush, so maybe the Dems better keep quiet. To borrow the title, itself borrowed, of course, of Dean Acheson's memoirs, Messrs. Geithner and Summers, at least, were Present at the Creation of the current economic mess, even if Phil Gramm played the role of Gilgamesh.

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