Complete Lack of Confidence

From this article in the WSJ:

Officials in Europe, facing a widening banking crisis on the continent, on Tuesday urged the U.S. to pass the rescue plan this week. German Chancellor Angela Merkel said the quick passage of a rescue package is “the precondition for creating new confidence on the markets — and that is of incredibly great significance.”

The European Union, meanwhile, was disappointed with the vote, a European Commission spokesman said. “The United States must take its responsibility in this situation, must show statesmanship for the sake of their own country, and for the sake of the world,” said Commission spokesman Johannes Laitenberger, who added that a reworked version should be approved swiftly.

My friend Ellen forwarded me the article with the following note:

fascinating leadership problem, destined for the HBR & all other serious publications…

if Bush hadn’t squandered his leadership-ness, which is now compounded by his lame-duck-ness, people would listen to him on this issue, but instead we have this bizarro 3-way leadership vacuum where exactly no one has any credibility nor ability to inspire the American people

so who should come forward to champion this thing & stem the tide of anger that paralyzed the House? Bush the Elder? Bill Clinton? the two together?

it’s an amazing opportunity to reassert American world leadership. American tax payers take the hit to help stabilize the global financial system – another form of entering WWII, creating the Marshall Plan, etc.

caveat – not that I really have any idea what the bailout will really accomplish, still less what goes into success on this issue… 😉

Amazing… which reminds me a little of this article in the New Yorker that said:

That’s because the entire edifice of Wall Street is built on confidence. Investment banks rely on short-term debt to run their businesses, and their businesses consist of activities—trading, dealmaking, money management—that depend on people’s faith in their ability to honor their obligations. As soon as the customers and creditors of a company like Lehman start to wonder whether it might collapse, they become less willing to lend or to trade, and more likely to demand their money back. The perception of weakness exacerbates the reality of weakness. And although there are myriad measures of a company’s health, nothing looks scarier than a stock price that’s heading toward zero.

So, um, does that make the whole of Wall Street a confidence game in which the vast majority of the American people – the ones who aren’t “insiders” – are getting conned?

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