We have to be fair. We were perplexed when President Bush made no mention of the current mortgage mess or stock market turmoil in his remarks on the economy Wednesday morning. But someone must have whispered in his ear immediately afterward because he's been talking about little else ever since. First in a meeting with elite economic reporters Wednesday afternoon, then in an interview with Fox News' Neil Cavuto, and on Thursday morning, in an impromptu press conference. We suspect that since all these occasions involved taking questions from living, breathing human beings, he realized that it would be impossible not to acknowledge that, yes, something untoward is going on in the economy.
In each case, he conceded that there has been a correction in the housing market, but said he was confident that the sector is headed for a "soft landing." As for the the credit markets, Bush even mentioned the word "risk." According to the New York Times' Steven Weisman, "Mr. Bush, who has a master's degree in business administration from Harvard, confidently used phrases like liquidity, risk assessment and market adjustment to describe complex economic conditions."
Here's what he said to reporters this morning:
Another factor one has got to look at is the amount of liquidity in the system. In other words, is there enough liquidity to enable markets to be able to correct? And I'm told there is enough liquidity in the system to enable markets to correct.
Here's what he said to Fox's Cavuto:
I do believe that we're adjusting from a plethora of capital that came rushing -- or liquidity that came rushing into our system. And we're watching it very carefully and, you know, paying attention to, you know, the -- whether or not there's enough ample revenues in our society, ample cash in our society to help for there to be a natural adjustment through the marketplace.
Fair enough. Such formulations, even if predictable, are exactly what was missing from the president's initial, tone-deaf speech on the economy. Accordingly, How the World Works will retract yesterday's snarky headline: Bush does know that there is a mortgage mess.
However, now we're wondering whether he should have kept his mouth shut. As of 1 p.m. EDT stock market indices were in disarray -- the Dow Jones Industrial Average had plunged 170 points. We're pretty sure the proximate reason for this is the "tape bomb" announcement by the French bank BNP Paribas that it is suspending withdrawals from three of its hedge funds, and the ensuing decision by both the European Central Bank and the Federal Reserve to pump billions of dollars into markets to maintain liquidity. After pretending that the gathering storm in credit markets had blown over, suddenly traders see cyclones approaching from every quarter.
But maybe the real truth is that investors were shocked into a mob panic by the sight of the president correctly using the word "plethora." Surely that's a sign that the End Times are nigh?