A Leadership of Frankness

The headlines these days are literally shouting:

“U.S. STOCKS SUFFER ON FEARS FOR ECONOMY”

“FIGHT FOR SURVIVAL ON WALL STREET”

“DAY OF RECKONING ON WALL STREET”

“U.S. SEIZES MORTGAGE GIANTS”

“AIG, LEHMAN SHOCK HITS WORLD MARKETS”

And on the front page of the New York Post, a big red arrow and the number “504” in bold type. The Dow Jones Industrial Average had dropped 504 points in one day, the largest drop since after the markets opened following 9/11 and two points larger than the crash of October 19, 1987 (although less as a percentage of the entire market.)

I part the slats on the Venetian blinds in my office. Summer Street in downtown Stamford is empty. Thank goodness. No bodies on the streets. So far this is not a replay of Black Monday, the day of the big 1929 stock market crash.

But it is serious, make no mistake. Last year there was fear that homeowners may not be able to pay their mortgages. That led to fear that the bonds backed by those mortgage payments might default. As the value of those bonds plummeted, the credit of the companies holding them dropped. Then the people dealing with those companies started to worry and ask for more collateral support. Which brings us to today, when it sounds like the banks themselves are nervous: Nervous that when they loan money to each other it may not be repaid.

As Franklin Roosevelt said in his inaugural address, “We have nothing to fear but fear itself -- nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance.”

I went back to Roosevelt’s address. You can find the entire text of the speech here: http://www.americanrhetoric.com/speeches/fdrfirstinaugural.html . Reading it I was surprised to find that his statement about fear was not in the middle of his address. It was right up front. Roosevelt was elected in the middle of the Great Depression, 1932, and he chose not to sugar coat his message but to use it as a sledge hammer. Here is the way his address began:

“This is a day of national consecration. And I am certain that on this day my fellow Americans expect that on my induction into the Presidency, I will address them with a candor and a decision which the present situation of our people impels.

“This is preeminently the time to speak the truth, the whole truth, frankly and boldly. Nor need we shrink from honestly facing conditions in our country today. This great Nation will endure, as it has endured, will revive and will prosper.

“So, first of all, let me assert my firm belief that the only thing we have to fear is fear itself -- nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance. In every dark hour of our national life, a leadership of frankness and of vigor has met with that understanding and support of the people themselves which is essential to victory. And I am convinced that you will again give that support to leadership in these critical days.” [Emphasis mine.]

Wow. I know that our current economic climate does not approach the terror of the Depression. I also know that we are in the middle of the “silly season” of political posturing, when both parties revel in pandering to applause lines and quoting each other out of context and playing “gotchya” with each other, and when so much of the rhetoric that postures as commentary is babbling palaver.

Still, Roosevelt is on to something when he talks about “a leadership of frankness.” If we don’t acknowledge our challenges, we can’t meet them. We can be ostriches, hoping that things will improve. Or we can be lions, straddling the path and confronting our demons.

I have been relieved to see leadership in our economic policy over the past few weeks. It’s just a shame that it took a crisis for us to make important changes in our financial system. But I sit here wondering: What will it take for us to give the same serious attention to energy policy. We are in a world of energy shortage, with a delicate supply and demand balance that is on the verge of crisis. And yet, unlike the frenetic action we have seen in recent weeks in the financial markets, we see no such sense of urgency in the energy world.

So the next time you hear a politician talk about energy policy, ask them why they aren’t frank with us. Why they don’t acknowledge that we will never have alternative energy if we keep looking for short term fixes instead of long term solutions. Why we need to invest in new energy technologies and make carbon a more costly alternative, not a cheaper one. Why we need to make energy a small fraction of the family and business budget the way it used to be, not the growing cost it is today.

And when the politicians show us that they are willing to provide a “leadership of frankness,” then we will respond with the “support of the people themselves which is essential to victory.”