BUSH:THE LAWRENCE WELK OF WASHINGTON

Bubbles bubbles everywhere. It's "Wuunerful...wunnerful" intoned the stiffly smiling Lawrence Welk (television bandleader of the 1950s to 1980s era) mechanically keeping time with his baton, like a happy victim of Parkinson's disease, as his "champagne music" and trade-mark bubbles wafted up across the screen. Perhaps not all of you will remember (some were not even born yet) Mr Welk. Known as the "bubble man" by many of his fans, he reminds me of the stiff faced and smiling Mr. Bush who according to a recent NY Times article is the modern version of the old TV "bubble man". The NY Times accuses Bush of being one of the primary causes of the housing bubble. That dumb smile common to both men and their bubble associations seems to fit. See "White House philosophy stoked mortgage bonfire, December 20, 2008,(http://www.nytimes.com/2008/12/21/business/21admin.html?em)

The Times article quotes President Bush:“We can put light where there’s darkness, and hope where there’s despondency in this country. And part of it is working together as a nation to encourage folks to own their own home.” — Oct. 15, 2002.

"Eight years after arriving in Washington vowing to spread the dream of home ownership, Mr. Bush is leaving office, as he himself said recently, “faced with the prospect of a global meltdown” with roots in the housing sector he so ardently championed." The Times puts the blame squarely on Mr. Bush:"But the story of how we got here is partly one of Mr. Bush’s own making,....From his earliest days in office, Mr. Bush paired his belief that Americans do best when they own their own home with his conviction that markets do best when let alone." So Mr. Bush is the Lawrence Welk of the housing bubble. The bubble generator!

Which leads me to a piece by the always interesting Mr. Krugman of the NYT: entitled "Life without bubbles" http://www.nytimes.com/2008/12/22/opinion/22krugman.html

In reference to the end of the housing bubble and the economic stimulus, Krugman asks, "What comes after that?" What comes after the end of the housing bubble and the economic stimulus plan takes effect? Can we go back to business as usual? More bubbles? Krugman warns that we can not.

The false prosperity of the past depended on the huge bubble in housing, which replaced the stock bubble, the earlier dot.com bubble and an even earlier land bubble. But according to Krugman, the housing bubble isn't coming back soon and the wild spending and excesses of those years will not return either. That sounded good to me. Krugman warns that people will not be able to use the equity in their homes as ATM machines anymore. Some of us with an eye to the environment and the alteration and decay of our towns and sell-off of our valuable and irreplaceable farm land may see that as a good thing.

Perhaps with the end of the house-building boom we will see a slowing of the pick-up-truck traffic going east to undeveloped land in eastern Brookhaven and the Hamptons on weekday mornings (and have fewer nails in our tires from careless construction workers). But what will these unemployed builders, real-estate agents, plumbers, roofers, and self styled "developers" do with themselves? Who will support our economy? Will some new "bubble" come along?

I personally have hope for a "green bubble"which will attract investors to our shores, an put our underemployed to work developing and building efficient and salable wind mills, solar power devices, and practical geothermal and tidal technologies of the future. These industries would serve our domestic need for energy in a time of global scarcity, grow our economic base, and reinvigorate and expand our weakened manufacturing sector. Export of this green technology could alter our trade deficit to the positive side..that is, selling abroad more than we import. (Sorry China! You will have to retool your economy from the role of our economic Sancho Panza, as the contributor and enabler of our bubble excesses to a some new role.) I envision a US with a secure energy base, fueled by natural gas, nuclear, and replenishable, non-polluting green technologies, and a healthy manufacturing sector with a sound trade balance with the rest of the world. In such a world we could pay for universal health care and we will not need such a large outlay for military spending.

These visions of a green economy "bubble-free economy" will require vision and continued fiscal support from Washington. But Mr.Krugman warns us that it may be a long time before the US economy can live without bubbles. Let's hope that our leaders in Washington have this vision too.