Submerging markets

Carlos Menem’s 1989 victory over Argentina’s Radical government wasn’t much of a surprise given that the country’s inflation was running about 5,000% annually on election day. In Buenos Aires to cover it, I stood in a line to change some dollars and watched the peso slip 2% between the time I walked in the door to the moment I got to the exchange counter. After the election things were falling apart so rapidly that the in-comers and out-goers got together and made a deal to speed up the transition before the whole place fell apart.

Sound familiar? Yet another way in which the U.S. is looking more and more like dysfunctional Third World countries, now known as ‘emerging markets.’ Make that ‘submerging’ in our case.

Obama’s economic team is not only setting up shop, they’re pretty close to nudging the current seat-warmers out of the throne rooms even before they’ve collected their last paychecks. It’s Obama’s managers and his proposals for restarting the economy that are catching the world markets’ collective eye while the Bushites look clueless. They toss unfathomable sums of cash at Citigroup to save its sorry corporate ass but if experience is any guide, that will only buy a couple of days’ relief before banking and credit resume their whirling descent into the toilet.

There comes a point, as occurred in Argentina, when conditions deteriorate so severely that those in charge simply lose all credibility. Even if they were miraculously to generate great ideas and recognize their own past errors, it’s too late—the restoration of even minimum normalcy requires a new team. The question is, can we wait 57 days?