"What, me worry?"

By Ellen Ratner

Next to George Washington and Abraham Lincoln, probably the next most familiar face in America is that of Mad Magazine's Alfred E. Newman. His one liner, "What, me worry?" became famous at a time when the Cold War threatened to go hot, and most people were worried about a 20-megaton Soviet hydrogen bomb coming soon to a city near them. Thus, "What, me worry? was the ultimate parody of the 1950s and 60s: Nuclear war? "What, me worry?" An African-American couldn't get a cup of coffee at a Woolworth's lunch counter? "What, me worry?" Prescribe thalidomide for morning sickness? "What, me worry?"

Although Alfred never went away, "What, me worry?" has an encore engagement in the same theater as the last time – Washington, D.C. You can boil down the elaborate reassurances to one phrase: "What, me worry?" Secretary Henry Paulson on the subprime mortgage collapse: "What, me worry?" George Bush on the imminent recession: "What, me worry?" Fed Chairman Ben Bernacke on "Honey, I shrunk the dollar": "What, me worry?" In fact, whether it's the looming bankruptcy of the American airline industry, a conviction in the bond market that inflation is the main enemy, gold at $1,000 per ounce or oil at $110 per barrel, Washington is like an aviary, chirping away with "What, me worry?" The fact that tens of millions of Americans are already suffering, or are terrified at the prospect of economic decline doesn't seem to have occurred to anybody.

Our economy is beset by malignant cancer, and it's as if bland, stupid reassurances are somehow a substitute for an honest diagnosis and a tough-love cure. This country has traveled so far from a culture of candor that today, we would probably dismiss FDR's famous "Fireside Chats" as scaremongering. Think of today's phrases: Assurances that "the fundamental underpinnings of the financial system are sound," that economic disaster is really no more than a "bump in the road," that the declining dollar is really "good" for us, (translation: good for the National Association of Manufacturers) and that a caring political class is sending in the cavalry in the form of a $600 rebate (a powerful stimulus indeed – in the year 1850).

However, in between the bromides, palliatives and political Prozac, a few disturbing facts can still pierce one's skull. Try these: This week we learned that in the next two years there could be as many as 3.3 million new home foreclosures. You can add to that the 1.3 million homes in foreclosure in 2007 (nearly double the 2006 rate). You do the math: With an adult population of approximately 220 million and a 65 to 69 percent home ownership rate, more than 6 million adults may be losing their homes. Six million adults, and who knows how many children? And people wonder why Barack Obama, thought by some as the most liberal U.S. senator, is so popular.



Congress and White House plans for dealing with this amount to little more than, "What, me worry?" While some Democrats want to give $400 billion to help people stay in their homes, most others – and Republicans, of course – shout about a "government giveaway" and the old "lack of personal responsibility." Odd, isn't it? No one asked about personal responsibility when it came to bailing out Bear Stearns, or providing billions and billions in liquidity to financial markets in the Fed's famous, "No Fat-Cat Left Behind" program. At least when Chrysler was bailed out years ago, there were tens of thousands of manufacturing jobs at stake. What was at stake here? Goldman Sachs' investment in Collateralized Debt Obligations, or CDOs? Well, whoopy-doo!

There is more bad news coming: Credit card debt defaults and more problems with CDOs. Meanwhile, only two job sectors have shown much growth: Education and medical care. As a country, we better be able to grow more than these if we expect to compete with China, India, the EU and Russia.

Instead of "What, me worry?" the real question is "What the hell should we do?" What can we do? First, we need a little candor. There are no good options available right now. The U.S. government must act now to prevent the housing/mortgage crises from going into a free fall. It must address the credit problem both individual and business levels. And it must do these things with the same fervor that FDR brought to the early years of his administration. No, we are not –yet – in a depression. But we must act now to avoid the possibility of one. Here are two suggestions:

Fix the crumbling infrastructure: Repair schools, roads and bridges; develop high-speed trains, national fiber-optic and Internet systems. This puts government money in the hands of working people and those who employ them.

Create an NRA program for real "green-collar" jobs. We've got the brains and brawn to address global warming and create products that can be exported. Just like steel, automobiles and railroads were to 20th century, so green technology, nuclear power and climate healthy production and consumption processes will be to the 21st century. And we've got an edge here because the early development economies like China, India and Russia aren't paying sufficient attention.

Talk is cheap. Suffering is real. And "What, me worry?" is a lie.

Full Senate Banking, Housing, and Urban Affairs Committee Hearing on Weak Housing Market and Related Credit Crunch Creating Stress in Banking Community

Today the committee hearing focused on the problems currently facing the banking industry, and how those problems are largely caused by the weakening housing market and credit predicament in the nation. Present at the hearing were Chairman of the Federal Deposit Insurance Corporation Sheila C. Bair, Comptroller of the Currency of the US Treasury John C. Dugan, Director of the Office of Thrift Supervision John M. Reich, Chairman of the National Credit Union Administration JoAnn Johnson, Vice Chairman of the Board of Governors of the Federal Reserve Donald L. Kohn, and Iowa Superintendent of Banking Thomas Gronstal.

One colorful individual at the hearing was a member of Code Pink, of the women-initiated peace movement, who walked up to Senator Dole and asked her what she was doing to ensure that US troops were coming home. Wearing a t-shirt with the slogan "Don't Fund War," and a hat of pink flowers and pink ribbons with "Make out, not war" scrawled across the top, the woman was escorted out of the room by a police officer. On her way out she cried, "How about housing for Americans rather than more housing for the military."

The hearing then progressed onto the issue that the weakening housing market was due to credit problems, and that the credit problems, in turn, are due to problems in the subprime market. Chairman Dodd voiced the general sentiment of the hearing, stating, "Where were the regulators? Why didn't they do more? A loan should be given on the loaner's ability to pay."

The panel of witnesses began with Ms. Bair, who called for a return to traditional lending practices. According to Ms. Bair, capital needs to flow to banks in order to provide security following the implementation of Basel II. The value of Basel seemed to be of great concern in the hearing. Senator Dodd questioned Ms. Bair on the impact Basel would have on the situation, to which she answered that because Basel runs on model system, it is only as good as the data they put in them. Therefore, they can only anticipate problems to a certain degree. Mr. Kohn echoed Ms. Bair, stating that as Basel II is implemented, banks must have capital to back it up and safeguard its solvency and overall economic stability. More capital essentially means banks, "being more active lenders who are actively engaged," and whose "viability not threatened."