WASHINGTON, July 23 (UPI) -- On Sept. 4 last year, literally one week before the World Trade Center catastrophe, we began a United Press International economic analysis with the following words: "Labor Day weekend is past and the Dow is still stuck below 10,000. It does not have quite the epochal ring to it that the cry "Great Pan is dead!" did in fourth century AD Greece. But it carries a heavy weight of destiny all the same."
Almost eleven months have passed since then. On Monday, the Dow dropped below 8,000 and it is still plunging like an elevator with the cables cut. The cries on Wall Street that "Great Pan is dead" are echoing around the world now all right.
The divine voice that boomed out in the home of the ancient oracle and that echoed over the sun-caressed waters of the Mediterranean around 100 AD was quickly interpreted throughout the Roman Empire as an admission of defeat by the old gods of Mount Olympus. Christianity had indeed conquered them. The effects would be felt in politics, culture and sport as much as in the world of abstract religious faith forever after.
It took more than two centuries for the followers of the Nazarene to literally conquer the Roman Empire. The victory of Constantine the Great ant the Battle of Milvian Birdge in 312 AD for the first time established a Christian convert as emperor of Rome. Apart from a brief theological interregnum under Julian the Apostate half a century later, that hold would never be broken.
Little more than a week after the Dow Jones dipped below 10,000 last fall, al Qaeda terrorists flew two hijacked US airliners into the Twin Towers of the World Trade Center in New York City, bringing them crashing to the ground in hellish cascades of rubble. 2,800 Americans died in the carnage. A new age had arrived all right.
But the Bush administration still believed its strategy of keeping the American economy strong was working regardless, and that while the Dow would falter, it would soon surge onwards and upwards. How could it do otherwise with George W., Bush and Dick Cheney at the helm, cutting taxes for the rich to the tune of $1.35 trillion over the next decade?
Even the Enron meltdown last December did not dent the complacency in the White House -- though that evidently was not shared on Wall Street. Only the comparable collapse of World Com and its colossal $3.8 billion bankruptcy seems to have done that. It certainly turned the long, remorseless down word slide of the Dow into a panic stricken rout. It continues as this analysis is written, will no doubt be continuing when it is read by UPI readers and subscribers. And who knows where it will end.
In the dizzying years of the 1990s, the Dow seemed fated to an ever onward and upward rise, and this sense permeated all of American and, indeed, world society. Not since the years of the great Bull Market of the Roaring Twenties had pain-free, giddy optimism about a future of limitless possibilities so saturated American society, and beyond it, the world.
President Bill Clinton and his "new" Democrats presided over the years of the surging Dow. But current President George W. Bush and the policies he is so devoted to, reflect the giddy optimism of the era that has already passed better than anyone.
It was an era when the apparently eternal upward-and-onward rise of the U.S. economy was a rising tide that floated all boats, however un-seaworthy they were.
It was an era when, as President Ronald Reagan had prophesied, soaring tax receipts from a roaring economy could indeed eliminate the annual U.S. federal budget deficit and usher in a new--and, it was believed, long era of balanced budgets with money to burn.
It was an era when Bush could seriously push the policy of "saving" Social Security by "freeing" 10 percent of the assets accumulated in it to be invested in Wall Street. His thinking -- assiduously promoted by the likes of columnists Charles Krauthammer and George Will -- was that future pensioners would make far more money by investing their Social Security savings on Wall Street than by trusting the dull, boring, incompetent, old federal government to mind it for them.
But the spiraling Dow and the Nasdaq high tech composite index bear that fell before it bear witness that the age of such beliefs is past, as past as the world of Graeco-Roman Classical mythology was following the triumph of Christianity.
What follows remains unchanged from when we ran it in UPI Analysis 11 months ago:
"How ridiculous belief in the power and validity of divine beings with the attributes of Jupiter-Zeus and Athena-Minerva, or Apollo, god of wisdom, suddenly appeared in the relentless, crisp clear light of the new Christian world! How absurd, the beliefs and practices -- and many of them were admirable and remarkably successful -- of 1920s Progressive Republican America appeared, after the grand climacteric of the Great Depression!
"Suppose the recession widely predicted takes hold over the next year. And suppose President Bush and his team fails to keep their nerve and steer a steady course when it does hit. Then the policies and beliefs of the "Roaring Nineties" that guided them will crash to splinters in credibility. They will rapidly appear as antiquated and relevant, even absurd, as the beliefs of Pagan Rome and Roaring Twenties capitalism did only a few years later.
"Bush has repeatedly shown he is not concerned about America's enormous balance of payments deficit, the largest per year of any nation in recorded human history. Neither was the Clinton team before him. As long as the U.S. economy roared ahead and the Dow bull bellowed, snorted and soared, they did not have to.
"But if a rising tide lifts all boats, a sinking one drops them on to the rocks where they are smashed. International investor confidence in the United States cannot be taken for granted in a recession economy. It can be maintained, but only by a rigorous and even ruthless discipline in keeping the dollar strong, and interest rates consequently high in the short term, even if that drives many un-competitive and under capitalized enterprises into bankruptcy.
"President Reagan proved capable of such toughness and ruthlessness facing down the great recession of 1981-82. President Warren G. Harding showed similar toughness after his inauguration in 1921n dealing with short but severe recession he inherited from Woodrow Wilson. Junichiro Koizumi currently shows signs of being the first Prime Minister in modern Japanese history ready to let such painful shakeouts occur to restore fiscal stability and investor confidence to the long-moribund second largest industrial economy on earth.
"But there is no sign yet that Bush is capable of showing similar resolution. Everything that has been seen of his economic performance over the past seven months militates against it.
"In public statements over the past week he has made very clear he still believes recession can be avoided entirely. He clearly remains wedded to Alan Greenspan's policy -- eerily reminiscent of Japan's disastrous course over the past decade -- of driving down interest rates to keep short-term prosperity roaring ahead.
"In comments on Labor Day, he made clear he still believes his badly structured and ill thought out tax cut, with its derisory rebate of $300 for every family, will by itself be the magic nostrum that will reverse the looming crunch of rapidly faltering consumer confidence. And it is only the remarkably high levels of consumer spending that have delayed the slide into recession this far.
"If George Bush will do these things when the wood is green, what will he do when it is dry? If he shows such a lack of resolve and failure to implement traditional Republican policies to maintain sound money and re-establish business and investor confidence, what will he do when the current winds of rising unemployment escalate into a full-scale howling gale?
"Central to Bush's economic strategies, such as they are, has been the conviction that the Dow would respond to the stimuli of his tax cuts and the interest rates cuts is team have quietly urged on Greenspan. Then, according to the White House game plan, the Dow would rise majestically anew on flames of consumer confidence and investor trust in the wise and benign neo-Reaganites in the White House.
"But the Dow has not responded the way it was supposed to. It has not responded at all. The epochal fall through the 10,000 barrier last Thursday may indeed be briefly reversed, but it appears to be part of a massive slide that only began with the bursting of the great speculative Internet bubble a year and a half ago, and that still continues unabated now.
"There will be many casualties of this fall. More than the truly unsound policies of the Bush administration will fall victim to it. Sound policy babies will probably be thrown out with the dirty bathwater. It is the way of loser administrations to discredit every thing they have touched.
"The booming oracle that echoed in the temples of Wall Street last Thursday did not herald the death of traditional religious belief like the oracle proclaiming the death of Great Pan. But it may have heralded the end and transformation of much else."
That was what we published in UPI Analysis on Sept. 4. We knew it would appear absurd, even blasphemous -- insofar as such a term can be used for secular non-believers -- to many who read it then. Does it still appear that way now?
