Paula: One thing I appreciated about George Bush’s speech last week about the government bailout was the effort to explain the crisis in simple terms. Part of what bothers me so much about the financial crisis is that I don’t understand it, something that I feel particularly insecure about. I don’t even know how to ask the questions required in understanding it.

 

  Robert: As a former newspaper reporter, I can say that reporters live for the challenge of making anything more understandable. I think the science writers sometimes have the hardest time. But this subprime mess has reporters utterly struggling to make sense of it for a general audience. I listen to “market place,” an excellent NPR business show, and they talk about struggling to understand the crisis, not just to explain it.

Apparently one cause of the crisis, from what I can tell, is that no one really understood the nature of it. That’s why the banks became so vulnerable, and I think that’s why we’re in this crisis. No one will loan money to these big banks because they FEAR these banks’ subprime loans may prove worse than expected. The fear, from what I can tell, stems from the fact that no one can actually quantify the problem with any precision.

Trying to understand the bailout and all has been quite humbling for me. I have always seen myself as someone who would be able to understand the important events of the world. I have often “wondered” what it was like for people not so well educated — what’s it like to not grasp huge happenings in the world. Well, with this subprime mess, I humbly join the masses in throwing up my hands. A while back, I remember hearing on NPR or somewhere that Bernanke, the fed chairman, had had to schedule long sessions of meetings so that he could understand the subprime thing!

 

Paula: You make me feel like those students of mine who are afraid to look stupid and ask for an explanation of something. With respect to this economic mess, we need to speak up and force explanations until they are clear. We tended not to do so because we assumed that those in charge were experts. Turns out, they weren’t experts, or, if they were, they were expert crooks.

 

Robert: This really could be a great opportunity for democracy. We citizens should force the members of Congress, etc., to explain this crisis to us better than they have. This subprime mess and the proposed bailout really do bring up all the key issues of modern democracy, as in how do we balance the judgment and wisdom of “experts” while still holding them accountable. This crisis also speaks to the corruption that comes with being an expert who has knowledge that the layman doesn’t have. It is so easy for the experts to fool themselves about the wisdom of their judgments because, after all, they are experts!

I recently read excerpts of Bob Woodward’s latest book on the Bush Administration and the war in Iraq. From 2003 to 2007, Bush’s line on Iraq has been “I will make decisions based on the recommendations of my commanders on the ground.” I took this as his way of saying that outsiders could not fully understand the situation in Iraq and that the only “experts” worth listening to were the military people in Iraq.

Woodward shows that the current progress in Iraq came only after Bush did an end-run around the military and its leaders. He ignored and defied all the generals (experts) whose advice he had formerly extolled. The generals did not want to send additional troops. Bush ultimately ignored their advice, and he has achieved some good results. I only wish he would come out and admit that “listening to the commanders on the ground” line was a problem. He ultimately sought outside advice. The “surge” was really developed by Stephen Hadley, Bush’s national security adviser. Hadley is a civilian, and he works out of Washington.

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