Nov 18th 2008

Bush's finest hour, as the world's deep thinkers gathered for pheasant and wine

by Sol W. Sanders

Sol W. Sanders, (, is an Asian specialist with more than 25 years in the region, and a former correspondent for Business Week, U.S. News & World Report and United Press International

There is an old cliché which says that the victors write history.

None of us will be around to hear what future historians make of the last days of George W. Bush's Administration. Forget about the current chroniclers like the Havardian Niall Ferguson who has forgotten the first law of a Boswell, that you do not make outrageous analogies to past events. [How Adam Smith and the giants of the Scottish Renaissance must roil in their graves at their current progeny!]

Mid-November may have been George W. Bush's finest hour. He didn't want the conclave of the world's leaders thrust on him. But in the end, he accepted it in an effort to stem the hysteria arising from the worldwide credit crunch and the oncoming global recession. There was obviously a great deal of work to be done awaiting elsewhere behind the scenes. Nor did it help that Barack Obama, the president-elect kept saying the U.S. could have only one president at a time, nevertheless kept publicly mixing like a kochlaffle in policy issues he hadn't heard of less than two years ago. On The Hill were the denizens of the incoming majority who blamed Bush for deregulating the markets and bringing on the avalanche when it was their own "regulation" - their demands that financial institutions lend to the credit unworthies and their petty corruption involved in its machinations - which had caused the disaster.

But just as in Rome, bread and circuses have become the staple of the day. And the White House was thrown open to the hoard of leadership of the world's major and minor economic powers. They all came with their theories and their favorite fixes for the crisis. In truth, they were all mendicants, hoping above all else, that the incoming American messiah would not bend to the protectionist demands of his fossilized trade union constituency. For truth be told, although the East Asians had taken in reams of what appeared to be a longterm declining American fiduciary paper, the deus ex machine the U.S. and they had created - the insatiable American maw for imports and the multinational transplanted factories - was the elixir of life for their export-led economies. Without that American market, none of the newly industrializing and modernizing nations of Asia would continue to grow and prosper.

But they came tooting their own horns. The frenetic French President Nicolas Sarkozy was proposing to rewrite the monumental Bretton Woods agreement which picked up the pieces of the world economy after World War II. Not only was there no brilliant Maynard Milord Keynes around to dream up a new framework. ["The clerks always get the details wrong; the "bank' should be called 'the fund', and 'the fund' should be called 'the bank'."] But the whole idea of formulating a new world economic constitution in the midst of crisis was idiotic. It would have been like calling on the White Star Line's naval architects to produce a new Titanic design a few hours after it hit the iceberg.

The British Prime Minister George Brown [another example of the Scottish disaster] came all steamed up with how everyone should join hands, form a circle, and reduce taxes. You wouldn't have known that corporate tax "equalization" has been probably the greatest underlying issue between the reluctant Brits during their unhistorical flirtation with their European brethren on the Continent in the European Union. Brown's effort to turn himself into another coming of Tony Blair, to shed the growing unpopularity of his succession, might have been a successful pitch to some of the more naïve of British economic journalists. But it ignored weeks of beggar-your-neighbour policies by the EU members as they cut rates, threw out "stimulus" packages, and sucked in each other's capital in an effort to be the last failed economy on the block.

Australia's gift to the world of deep economic thinkers, Prime Minister Kevin Rudd - who had only days before leaked to the media how he had explained to Bush in kindergarten terms the world's economy - came laden with new proposals to turn everyone green. Green with envy, perhaps, but he would have to scurry home to figure out how he would escape his network of new carbon counting costs. It was only going to be weeks, if not days, before the collapse of the spiked commodity markets on which Australia had been living high on the hog took its toll. [His neighbours across the Tasman Sea, that is those Kiwis who hadn't already fled to Australia, had been the first modern economy to go into the sump back in June after a decade of socialist maneuverings.] Jumping the gun on his Democratic friends in Washington, he was already proposing a massive bailout for his Down Under American and Japanese "transplant" automobile assembly operations which were about all that is left of Australian manufacturing. It wasn't going to be easy to sell those new environmentally friendly models to the couldn't-care-less petrosheikhs in the Mideast, what with the crude price diving toward that $45 danger point, and discounted automobile inventories building up from Cherys in Wuhu to BMWs in Munich to Chevrolets in Oshawa.

China's President Hu Jin-tao made a detour through Washingon enroute to see his new found friends, Venezuela's reincarnation - even before he dies - of Fidel Castro, Hugo Chavez, his new bought friends, the Costa Ricans, and the Castro Brothers themselves in Havana. The Chinese leader was making all the noises of what the permanently irascible World Bank President Robert B. Zoellick had called for [in another Washington slot he had occupied], "a stakeholder" in the family of nations. But like those other world benefactors the Saudis, Hu had refused to come up with boodle for the International Monetary Fund trying to bail out various and sundry, including a failing state in Pakistan. It's indeed an ill wind: the crisis had been a godsend for IMF Managing Director Dominique Strauss-Kahn, rescuing him from an ugly "regrettable and reflected a serious error of judgment" when his Lothario activities with a Fund employee finally reached the public square. [In the cacophony few noticed that the European-dominated Fund directors had given their fellow Frenchman a pass for a more serious breach of style as well as management technique than had befallen the American, Paul Wolfowitz, at the sister organization, the World Bank only months before. It was no doubt another example of that European sophistication that the U.S.' chattering classes so often hanker after.] Hu did announce from the rooftops, however, that Beijing would throw more than a half trillion dollars of its reserves into stimulating its increasingly important economy - half, of course, already announced committed funds, another undisclosed portion for infrastructure projects that would be long of maturization, and a secret codicil for more subsidizing of flagging exports. That, of course, would further add to international payments distortion, thank you. So much for stakeholding!

Still, it was a grand party. The wined flowed, like wine, no Texas grill in the backyard but pheasant for the cognoscenti. And for the first time, the gates were thrown open to "the developing" countries. They even talked of going back to the conference table to rescue the latest failed round of trade negotiations which was supposed to put them into the business of improving the diets of malnutritioned millions and use their labour surplus for labour-intensive agriculture. The Bush Administration had come forward with record-breaking proposals to end agricultural subsidies, trying to blackmail the Europeans into halting their staggering props under food. But overplaying their hand, India and Brazil, aided and abetted by China, had dug in their heels. Now there was talk of rushing back to the drawing board to catch the last wind of the dying Bush Administration. Good luck!

Through it all, Bush maintained almost a blasé composure. No one could have asked for a more gracious host.

More importantly, above the fray, Bush made one of the best speeches in his career, maybe with some of the malapropism that characterizes his self-deprecating drawl. But without chauvinism, he intimated, again, his belief in American Exceptionalism. That's not the old American Communist Party claim under Jay Lovestone that Josef Stalin used to hound him out of the Comintern, the idea that socialism would come to America through the ballot box and not as elsewhere through revolution. It was the exceptionalism of the Founders who, Deist or Puritan, envisaged a republic that would be that proverbial "shinning city on the hill", a beacon unto the nations as the old Hebrew prophets called for.

Bush reiterated that American stood for liberty, for the rights of property reinforced by markets that had given so much prosperity to the new nation. He quietly rejected the calls for a new international regulatory agency, something no one had even conceptualized before they called for it. Cooperation, collaboration and transparency were the answers, he said, for getting out of the crisis. Meanwhile, he made a pitch, again, for maintaining free trade as well as political liberties as the way to push world toward progress.

They weren't satisfied. But everyone went home with their egos intact, their favourite gimmicks still being ballyhooed in their local media. Bush went back to work for the few remaining weeks in which he must prepare the ground, as best he could, for a successor who has an awful lot to learn - not only about economics but about public decorum. [The Nancy Reagan joke was not only nasty but like a lot of other Obama public gestures only adding to his growing list of difficulties as he takes office.] And the problems of the economy are not likely to grow simpler or easier to solve, especially if government intervention becomes the order of the day with the new Democratic sweep of elected office.

An old friend, Leo Labedz, publisher and editor of the best Soviet-watching publication during The Cold War, used to say that Washington was a combination of Clochemerle and Byzantium, the travesty of the first and the intrigue of the second. Clochemerle, for those who aren't acquainted with it, is a rollicking novel and an even better film about a French provincial city during the Third Republic that decides to install a pissoir [a public urinal] as a major infrastructure project and the political infighting that ensues. Byzantine, pertaining to the old capital of the Greek empire in the East which lasted a thousand years after it could no longer defend itself, is intricate, complicated; inflexible, rigid, unyielding, the New Oxford Dictionary says.

That was George Bush's Washington in early November. But he rose above it for a brief moment, hopefully to be recorded by some future historian.

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