Hapless, Hopeless George

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President Bush can’t help himself.

With the Treasury racing from half-baked solution to half-baked solution, with bankers lining up for a second round of no-strings attached handouts, with the Big Three automakers all but bankrupt and with the economy crashing, it somehow seemed to him like a good time to provide a defense of the American economy.

“Free-market capitalism,” he told the usual audience of Wall Street types yesterday, “is the engine of social mobility—the highway to the American Dream.”

Of course, escalators go up as well as down. With combined unemployment and underemployment approaching 12 percent, housing and credit card defaults accelerating, General Motors about to run out of cash and scarce credit squeezing all but the largest banks and companies, for many the American Dream is already an American Nightmare.

Even more amazing, President Bush essentially took no responsibility for economic mismanagement, neither chronic under-regulation nor the doubling of the national debt to $10.5 trillion. The closest he got was “because of outdated regulatory structures and poor risk management practices, many financial institutions in America and Europe were too highly leveraged.” Of course, he didn’t point out that he and his appointees at the SEC, Federal Reserve and other regulatory agencies were responsible for the dramatic weakening of the regulatory framework over the past eight years.

Bush’s speech isn’t a bad summary of the benefits of free markets in general, though it bears little resemblance to the world in which we are now living. Undoubtedly, it was partially motivated by the usual effort to rewrite history common to every soon-to-be-retired president. But it also was intended for the ears of the 19 heads of government arriving for the weekend G-20 economic summit.

The summit itself is a mistake that can produce nothing more than a crowded photo-op for Bush’s scrapbook.

On the one hand, it is irrelevant since Bush cannot commit the country beyond January 20. On the other, the headline purpose of reforming the international monetary system can’t possibly be accomplished, or even launched in a weekend when there has evidently been almost no real preparatory work.

Bush should have resisted the call to arms from French President Nicolas Sarkozy and British Prime Minister Gordon Brown, whose overheated declaration to domestic political audiences led directly to Bush’s convening of the G-20.

In fact, Bush’s real challenge this weekend is to try to turn this away from a bash America fest. This won’t be easy, since many people around the world—and probably most of the leaders at the Washington summit—are persuaded that the global crisis was made in America. That probably means this weekend’s meeting is, at best, the start of a process.

What would success look like?

Sherle R. Schwenninger of the New America Foundation told FLYP that a successful summit process would do two things. First, he says, the U.S. needs other countries to do more “to shore up their banking systems” and to “put in place serious stimulus packages” to prevent further economic deterioration.

Second, once markets and the global economy have stabilized, we need “the rest of the world to pull together with the United States in a major world economic recovery.”

Odds are that both tasks will have to wait for January 20.