Vice President Dick Cheney says that his boss, President George W. Bush, has no need to apologize to the American people for not doing more to head off the financial calamity, saying no one saw the crisis coming.
Now, Cheney is not the first government official to be "blindsided" by the negative turn in the economy. Whenever I hear someone say this, I am reminded of Casablanca in which people were "shocked to find gambling at Rick's".
If the government was blindsided by the downturn of the economy, maybe one should ask which particular warning sign they missed.
At the beginning of 2007, the entire niche of sub prime collapsed. Over the next several months dozens of banks like New Century, First Franklin, and Argent all failed. Several of these institutions were owned by larger financial institutions like First Franklin which was owned by Merrill Lynch. In August, Alt A began to collapse and with it the entire housing market. Now, companies like Greenpoint, First Magnus, and Indymac all collapsed as well. Many of these were also owned by larger financial institutions like Greenpoint which was owned by Capital One.
By September of 2007, Ben Bernanke began a series of rate cuts that continue today. Since the beginning of last year, our economy has consistently lost jobs. In March of 2008, Bear Stearns nearly collapsed and it was only saved through an unprecedented incursion into the market by the Fed. By July, both Fannie Mae and Freddie Mac also collapsed and needed to be bailed out.
Now, Dick Cheney can look a reporter in the eye and proclaim that he was blindsided by the downturn in the economy. Blindsided by what I might ask. If he didn't see the signs, exactly what was he paying attention to. The grim economic news was right in front of Cheney et al, and he simply didn't recognize it.
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