Sunday, March 08, 2009

Depression Psychology: Always Darkest Before the Dawn

This is one of those rare moments in our nation’s history in which panic about our economic survival, let alone short-term viability, is beginning to set in, driving the markets' slow death spiral. Wall Street reflects the growing anxiety felt on Main Street where credit remains frozen and every day looks like Christmas Day in March -- without the gifts.

President Obama has governed with a steady hand and his quiet confidence has won over the American people. As a student of history, he knows that in times of crisis the nation rallies to the leaders who have remained calm and steady in the midst of dark, swirling storms of uncertainty and fear. Men such as Lincoln, who led us through civil war and saved the union, and FDR, who brought the country back from the brink of Depression and dictatorship with unlimited faith in his “laughing revolution” facing down fear.

And yet, even as the stimulus money slowly makes its way into a moribund economy, there is apparent indecision within the Obama Administration about how to restore our financial system, and what to do with those so-called “toxic assets,” driving the markets’ freefall. Treasury Secretary Geithner has not inspired confidence in the markets with vague ever-changing plans, trial balloons, and a seeming lack of urgency. To make matters worse, the post of Undersecretary remains unfilled at Treasury, as well as other key positions, prompting some in the media to say Geithner is “home alone.”

Our faith in the President remains strong, but there is some unease that while he moves aggressively on the long-term future fronts of health care, energy, and green jobs, he is neglecting the short-term crisis of confidence in our markets that Tim Geithner, fairly or not, has the right prescription to rescue the financial system. In Britain, the government is moving swiftly to nationalize its banks, the latest being a 77% stake in the once venerable Lloyds of London. Nobel Prize winning economist Paul Krugman warns that if the Obama Administration doesn’t follow a similar strategy of temporary nationalization of the banks, and soon, our economy may sputter along not for months, or years, but for an entire decade or more, much like Japan’s “lost decade” of the 90s.

Short of outright Depression, this would be the worst possible outcome for our nation. President Obama faces unprecendented challenges not seen since the Great Depression: aside from our teetering economy, three wars sap our blood and treasure and there is the looming threat of a failed state on our southern border, as Mexico’s President Calderon wages a losing “existential war” against the drug cartels. This little publicized threat has already invaded our territory: Phoenix, Arizona, one of the cartels’ major drug conduits, hosts heavily armed paramilitary thugs roaming its streets and claims the unenviable distinction of being the kidnapping capital of the United States.

It’s always darkest before the dawn, so goes the song. In this can-do nation of eternal optimists our hopes rest heavily with a visionary president who looks to the future with confidence to lead us through the darkness of fear and despair into the first glimmers of a new day.

Carpe Diem.

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