My former colleague Joshua Bolten, the White House Chief of Staff, appeared on CNBC this morning to discuss the financial crisis facing America and the world. When asked how close we are to arresting most of the financial stress of the past six weeks, Josh responded that we’re a long way along and he’s pleased with the progress that’s been made, even as he recognizes hard times lay ahead. He then hit on the key point, which is that we have taken a situation that was spiraling out of control and made it possible for the credit situation to get back on more solid ground.
Josh went on to say this:
From the federal government’s perspective, the important thing was to prevent the huge systemic risk we were facing from the credit freeze up. And it looks like the right steps are in place. We probably have rocky weeks ahead, but that all looks good. And we are likely in a situation where a systemic meltdown has been prevented. That was the overarching, most important thing we could do. Now, the equity markets are probably responding to a … weak global economy… and that’s just going to have to work itself out. To me that causes a lot less concern than the kind of concern we had a month ago… Where we were a month, two months ago, we were in a situation where not only was the good growth we have had over many years was threatened, but the entire financial system was threatened. So the measures [taken by the federal government to support the credit markets] were absolutely necessary…
I concur. And while the economic situation is certainly difficult right now, I think when the history of this crisis is written, people will recognize that the Bush Administration, Congress, and nations of the industrialized world acted quickly and for the most part wisely, in a manner that averted a much worse situation. That’s difficult for most people to see right now, as the stock market gyrates wildly and a tough recession takes hold. But we were edging toward an economic catastrophe, and it now appears as if we have avoided it. One of the reasons for this is that Josh Bolten, one of the most impressive individuals to serve in government in my lifetime, was at his post.