Jack Matlock

David Warsh: Trying to make sense of Trump's frenzy of actions

"The Plot Thickens (silver shade instant film), by Corey Escoto, in his show "A Routine Pattern of Troubllng Behavior,'' at Samson Gallery, Boston, through April 1.    The Carnegie Museum of Art observed: 'The two- and three-dimensional works of Corey Escoto meditate on the production and consumption of illusion, both in terms of what we accept as photographic truth and, more broadly, how we distinguish fact from fiction in an ever more manipulated, media-saturated world.''

"The Plot Thickens (silver shade instant film), by Corey Escoto, in his show "A Routine Pattern of Troubllng Behavior,'' at Samson Gallery, Boston, through April 1.

The Carnegie Museum of Art observed: 'The two- and three-dimensional works of Corey Escoto meditate on the production and consumption of illusion, both in terms of what we accept as photographic truth and, more broadly, how we distinguish fact from fiction in an ever more manipulated, media-saturated world.''


The new president has been throwing up all kinds of ideas, orders and initiatives, presumably in hopes that some will find favor with Congress. How to understand what he’s doing?  I read some  careful newspaper stories, each very good, all slightly different. (WSJ: “Trump’s Week One Off Script”. WP: “Reality Check: Many of Trump’s early vows will probably never happen”. NYT: “Misfires, Crossed Wires, and a Satisfied Smile in the Oval Office”. FT: “A Whirlwind Week in the White House”.)  The single most useful insight I came across was that of Politico’s Eliana Johnson, speaking on National Public Radio’s On Point:

“The way to think about this government is sort of like a coalition government, where you’ve got the populist nationalist president in the White House [who’s] going to agree with the Republican majority in Congress on some things, [as] he’s going to agree with Democrats in Congress on other things, but there isn’t a party in Congress that he aligns or sees eye-to-eye with on everything, that’s going to be able to ram through legislation. Same with his cabinet secretaries – they disagree with him on many, many things. I don’t think he nominated secretaries who are pushovers.’’

Of the bewildering array of first steps Trump proposed, none was more interesting to me than a foreign policy initiative when he was expected to call Vladimir Putin, Angela Merkel and Francois Hollande. What might he have said?  For many years I’ve thought that Jack Matlock, the career Foreign Service officer who was George H.W. Bush man in Moscow, has understood the situation particularly well. He is the author of Autopsy on an Empire: The American Ambassador’s Account of the Collapse of the Soviet Union (Random House,1995) and Superpower Illusions: How Myths and False Ideologies Led America Astray and How to Return to Reality (Yale, 2010). Matlock took to his blog to propose a four-paragraph communique for afterwards:

“The presidents agreed that there is no good reason to consider their countries enemies and there are compelling reasons for the United States and Russia to cooperate in solving common problems.

“The presidents recognize that a nuclear war would be catastrophic for humanity, must never be fought, and that their countries bear a special responsibility to cooperate to reduce the nuclear danger and prevent further proliferation.

“Regarding specific issues, they agree to begin, on an urgent basis, consultations with each other and with allies and neighbors regarding ways in which current confrontations could be replaced by cooperation.

“One question that will inevitably arise regards the continuation of U.S. sanctions on Russia. In [Matlock’s] view, these sanctions are now doing more harm than good, but [he] would hope that decisions regarding them would be made in concert with U.S. allies, who have been pressed by the United States to adopt them. Perhaps President Trump could state that he agrees that sanctions are incompatible with the sort of relationship he seeks with Russia, and he intends to explore ways to create conditions that make them unnecessary.’’

It is anybody’s guess which of those among of the frenzy of proposals emanating from the White House might eventually become the basis for blueprints for action.  I can’t fault the method the president chose. Throwing much against the wall in hopes that something will stick is an approach to dire circumstances previously associated mainly with Franklin Delano Roosevelt. (Of course, then it was the nation’s circumstances, not the president’s, that were dire.) WSJ columnist Peggy Noonan and Joshua Green, writing in Bloomberg Businessweek, think that Trump is seeking to create a “workers’ party,” composed of “those who haven’t had a real wage increase in the last eighteen years.” I don’t think the populist nationalist in the White House is going to get very far with that.

David Warsh, a longtime financial journalist and economic historian, is proprietor of economicprincipals.com, where this first appeared.


David Warsh: The high-speed bailout of 2009


I spent some hours last week browsing the newly released transcripts of Federal Open Market Committee meetings in 2009.  Mostly I relied on the extraordinary “live tour” and subsequent coverage by The Wall Street Journal team.

I was struck by how greatly the action had shifted to the incoming administration of President Barack Obama.   The acute-panic phase of the crisis was past, and relatively little of the drama of that troubled year is captured in the talk of monetary policy.

On Jan. 15, President George W. Bush asked Congress to authorize the incoming Obama administration to spend $350 billion in Troubled Asset Relief Program funds.  Obama was inaugurated Jan. 20.

Treasury Secretary Timothy Geithner on Feb. 10 announced a financial stabilization plan consisting mainly of stress tests for the nineteen largest bank holding companies.

In a conference call, Fed Chairman Ben Bernanke explained to the Federal Open Market Committee that the details were hazy. “It’s like selling a car: Only when the customer is sold on the leather seats do you actually reveal the price.”

On Feb. 17 Obama signed the American Recovery and Reinvestment Act of 2009, a stimulus package of around $800 billion in spending measures and tax cuts designed to promote economic recovery.

In March the Fed announced it planned to purchase $1.25 trillion of mortgage-backed securities in 2009, expanding the “quantitative easing” program it had begun the previous November.   Also the administration’s bailout of the auto industry was completed.

In May, Geithner reported that nine banks were judged sufficiently well capitalized to have passed the stress tests. Ten others would be required to raise additional capital by November.  Gradually the stabilization was recognized to have been a success.

And in August, Obama nominated Bernanke to a second term as Fed chairman. Senior White House adviser Lawrence Summers had been unsuccessful in his efforts to replace first Geithner, then Bernanke.  He would try again.

Bernanke’s book-length account of all this is expected in the fall. About the same time, U.S.  Court of Claims Judge Thomas Wheeler likely will have delivered a verdict in a lawsuit against the government alleging that Bernanke acted illegally when the Fed took control of insurance giant American International Group at the height of the crisis.

Meanwhile, Summers has been repositioning himself, perhaps hoping to return to the White House in a Hillary Clinton administration.  In a New York Times piece, ''Establishment Populism Rising,'' Thomas Edsall interviews the Harvard professor for an update on Summers’s thinking.

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I continue to get my news of Russia from even-handed Johnson’s Russia List – five issues last week alone, containing 188 items from the U.S., European and Russian press, most of which, needless to say, I did not read.  Two that I did stood out.

Jack Matlock, ambassador to the disintegrating Soviet Union under George H.W. Bush,  wrote  on his blog that the “knee-jerk” conviction that Vladimir Putin  was directly responsible for the deliberately shocking murder of Russian dissenter Boris Nemtsov overlooks other possibilities. “So far nothing is absolutely clear about this tragedy except that an able politician and fine man was gunned down in cold blood,” he concluded.

Peter Hitchens, in The Spectator, argued that It’s NATO that’s empire-building, not Putin. His principal authority, George Friedman, founder of the high-end publisher Stratfor, dates the current phase of the conflict from Putin’s refusal to go along with US policy in Syria in 2011.

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I was struck that when the Club of Growth asked Wisconsin Gov. Scott Walker about his foreign- policy credentials, he replied that he considered Ronald Reagan’s decision to fire striking federal air-traffic controllers in 1981 “the most important foreign-policy decision of his lifetime.”


{Added by New England Diary overseer: Walker said of the firings; "It sent a message not only across America, it sent a message around the world'' that "we weren't to be messed with.''}

When you’re a kid with a hammer, the whole world looks like a nail.

(Reagan speechwriter and Wall Street Journal columnist Peggy Noonan offered Walker some half-hearted backup and The Washington Post zeroed in on Walker’s  cram course in foreign policy.)

I mention it mainly ir to say that, having spent most of my life covering economic development, one way or another, I’d say that the skein of events more important to U.S. foreign policy than any other were those in which the march in Selma, Ala.,  commemorated this weekend played an important part.

David Warsh is proprietor of economicprincipals.com and a longtime financial journalist and economic historian.