Who Do You Trust?

Let me take you back a few years. A generation or two ago, most Americans were ignorant about Washington. For whatever the reasons, most of us trusted our politicians. We thought they would speak the truth about foreign policy. We didn’t think they wouldn’t ever lie about major events. We knew they would tell the truth. Then something happened.

Certain events in a previous generation shattered our collective confidence in a trustworthy government. From the Kennedy assassination in 1963 to the Vietnam War, and ultimately Watergate – Americans stopped believing Washington. Thoughts of government conspiracy and cover-up continue to this day.

From those doubting an actual moon landing to those thinking the CIA took down the twin towers on 9/11, an air of distrust now surrounds anything the government touches. These sentiments seem to ring true about every Presidency since Nixon.

No wonder Obama’s campaign message was so welcome. “Change We Can Believe In” pointed to another time, when we believed everything our government said. Obama’s implicit statement to the American people was, “You can trust me.” So the electorate spoke and here we are. But it’s hard to undo a generation of healthy cynicism – especially with something like the financial markets.

In this case, we’re not just talking about opaque institutions, with complicated derivatives run by financial engineers. These topics are hard to understand on a good day. We’re talking about an economic system that has been shaken to the core as investment banks evaporate and giants in the financial world lean towards nationalization. As all of these things transpire, we all look to a government we’re skeptical about to save us from an impending financial doomsday.

On Friday, a well-known economic advisor to the President, former Fed Chairman Paul Volcker offered commentary on the economy. Speaking at Columbia University, Volcker said “I don’t remember any time, maybe even in the Great Depression, when things went down quite so fast, quite so uniformly around the world.” You will recognize these comments as the latest from Obama’s ‘Talk Down the Market Tour.’ Obama and Company’s economic negativity is almost palpable.

Maybe they’re right. But once again, we live in a Post-Watergate world. Americans don’t trust everything the government says anymore. It’s becoming common knowledge that crisis is a powerful thing in the hands of a corrupt government. It’s the one thing that will allow crimes that might otherwise be unthinkable in a normal environment. As more thoughts about the new Great Depression emanate from the White House, be wary. We may indeed be headed for a difficult few months and years. But don’t forget to take a healthy dose of skepticism before you swallow the line.