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you’re trying to be in “social stocks” or be in any other kind of stocks. . . . I know that we’ve heard some feedback from people that said our portfolios have held pretty well in this market, because they had a fair amount of cash, a fair amount of bonds in them. I think that the social investment community does tend to take a long-range investment view rather than a short-term view. We’re kind of holding our breath and hoping that maybe the country will get back to some of those fundamental values after all this. We’re real positive about what we’re doing here. A totally free market where everyone’s just out for themselves and out for making the maximum profit is kind of like [New York University economist Wassily] Leontief says, it’s like a sailboat without a rudder. I think that social investors are always having that deeper view of things. I think that long-term, the companies that we’re in are in industries that are doing positive products and they are companies that manage their employees very well, their employees aren’t going to walk out on them, they’re going to be, I think, survivors.. .. There’s no question that some of our stocks, here and there, some of everybody’s stocks, will be hurt badly and they won’t come back right away. You can’t have this kind of disruption in the financial markets without it touching the economy, there’s no question about that. I think that it will take some time for us to figure out exactly what sectors of the economy are going to be impacted, and a lot of it is going to depend on what the President and Congress does. We don’t know exactly what kind of programs are going to come out of all this. But in our mind there’s no question that the economy is going to be impacted. And maybe the stock market is just discounting a recession that was kind of built into the business cycle, in one week. Some kind of economic downturn, or at least slowing of economic activity, I think has been more or less guaranteed by this. Press Downplays The Real Crisis THOMAS FERGUSON Associate Professor of Government, University of Texas at Austin. I don’t own any stock, most of my friends don’t own much, and most of the American population doesn’t either. So I confess that my first thought about this crash was: so what? Anyone rich enough to have his or her net worth seriously affected by big declines in stock prices can probably afford it. On second thought, however: Aren’t you glad you still have Social Security to cushion the swings of “pension fund capitalism”? As usual, the press of circumstances directs us to consider the circumstances of the press. Since the crash, the media are, frankly, even more glibly fraudulent than usual. Perhaps never has the role of the press as cheerleader for the system been so obvious: we have networks that can not bring themselves to pronounce the word “panic” in public; newspapers that feature ads from brokerage houses that look like news, and news that reads like ads; almost everywhere an obsessive litany of reassurances that the economy is “fundamentally” sound. Most discouraging of all, perhaps, is “coverage” of why the crash occurred. There is nothing particularly mysterious happening. Indeed, there is a perfectly plain forecast of what has transpired in the last chapter of my Right Turn: The Decline of the Democrats and the Future of American Politics, written more than two years ago. Hoping to stave off a collapse of the world economy, the Administration has been trying to coordinate economic policy with our “allies.” Specifically, the White House one can hardly write “President Reagan” has been pressing the Germans and the Japanese to relate their economies and buy more from the rest of the world, allowing the U.S. to reduce its trade deficit with a fall in total world demand. Neither of the other two countries has been enthusiastic about this, since the postwar export success of both has been built on the reduction of domestic demand and strong pressures on wages \(which are likely to rise In the last few weeks, the Germans have raised interest rates repeatedly. Pressured by many members of the financial community and some industrialists, the Fed and the Administration hewed to the Louvre Accord on exchange rates, and followed the Germans up. By complaining in public, Treasury Secretary Baker eventually secured the worst of both worlds: he waited too long to prevent the fatal rise in interest rates, and he convinced everyone that macroeconomic coordination between the allies had broken down. All we are hearing about now in the press, however, is the government deficit. We are supposed to believe that a $20 or $30 billion dollar correction in public spending in a trillion dollar economy will somehow set things right. Only investment houses that absolutely must have a bond rally to remain solvent could possibly maintain this with a straight face. As Robert Eisner, the new president of the American Economics Association, has observed, there is simply no direct tie between the federal deficit, interest rates, and stock market declines. In the current situation, moreover, one could go much further. Given that confidence is shattered, further cuts in demand could be disastrous the coup de grace to a world economy already in shambles. And the Democrats? As one looks at Congressional leadership tumbling over itself in its haste to help the President cut the budget, and observes the carefully calculated silence of most Presidential candidates, one longs for the days when all we had to fear was fear itself. An Opportunity For the Left MICHAEL HARRINGTON Co-Chairman of Democratic Socialists of America, author of The Next Left. I think it’s a big mistake to take the stock market as the determining event to be accounted for. In my opinion, the stock market was wildly exaggerated for a long, long time. The London Economist, which is a very shrewd conservative publication, a year or so before the stock market crash pointed out that if you looked at the behavior of the stock market and the behavior of the real world economy, the two have very little to do with one another. What happened in part was a euphoric, even idiotic, bidding of stocks up and up, a wild speculative binge with borrowed money, corporate takeovers, program trading. Secondly, I do not think that the budget deficit is the cause of the problem. It’s a symptom. What’s the source of the deficit? The source of the deficit, is not, as Peter Peterson and others say, wild social spending. As a matter, of fact, if you look at programs like AFDC, foodstamps and the like, their real value has been going down since 1969. They simply cannot be charged with creating the problem. I look to two main sources, in terms of the budget crisis. One is, in 1981 then in a more subtle way in 1986 the tax law passed by the Congress THE TEXAS OBSERVER 15