If you aren’t in the Washington Post Sunday home delivery area, click here and immediately read this profile of Neel Kashkari, formerly the TARP czar, now living in the California woods, cutting wood, building a shed, and “detoxing.”
On May 1, after serving seven months under Presidents Bush and Obama, he resigned.
Within a week, Kashkari and his wife put their belongings into “indefinite storage.” They moved to a cabin near the Truckee River in Northern California. “Off the map,” he told his friends. He threw away his business cards, and made a list of the things he wanted to do:
1. build shed
2. chop wood
3. lose 20 pounds
4. help with Hank’s book
Here’s something I think about a lot. Suppose somebody had tossed a copy of Milton Friedman’s and Anna Schwartz’s Monetary History of the United States into a time machine addressed to Herbert Hoover in October 1929. Suppose Hoover had absorbed every lesson and executed the wisdom of hindsight perfectly. The United States would still have plunged into the nastiest recession of the century in 1930-31 – and Hoover would almost certainly have lost re-election. He’d be remembered now as a failure and loser, like George H.W. Bush, with only a few revisionist academics to defend him as maybe not quite so bad as all that.
And then the U.S. economy and the world would have recovered. The explosive growth of 1935 and 1936 would have arrived earlier, maybe even 1932 and 1933. No collapse of the world economy. No Hitler. No World War II. And nobody would ever have known what lay behind that unopened door.
Another century, another crisis. This time, federal authorities followed the playbooks left behind by Friedman and John Maynard Keynes. Did they do right? To a country struggling with 10% unemployment and then in time massive debts and deficits, it sure does not feel that way. And yet … civilization has not tumbled off the edge. The job situation has ceased to deterioriate. Recovery is perceptibly beginning.
Does that mean they did the right thing? Who knows? The economists will argue over it for decades to come without resolution.
It was crazy that one young banker was ever given the power and responsibility thrust upon Kashkari. No wonder he cracked. As for the rest of us: the door we did not open will not disclose its secret. But we can at least say that Kashkari earned his vacation.
2 responses so far
1 whidbey Island // Dec 6, 2009 at 10:08 pm
I just finished reading Sorkins book, “Too Big To Fail”. In light of Sorkins references to Kashkari ( pp 90-93, 419-20), I’m not sure I understand how you can conclude ” It was crazy that one young banker was ever given the power and responsibility… No wonder he cracked” Wait a minute. He asked Paulson for this responsibility. He actively persued Paulson and not just once but according to Sorkin, multiple times. You make it sound like his arms were twisted to take on this responsibility. That’s not true. He was adament, his plan (co written with Phillip Swagel ), should be persued. “This is what we should do, Kashkari told Paulson” pp 419. He was not a victim here. He knew full well what he was proposing and the likely consequences of his efforts. If he indeed “Cracked” as you say, it was more likely the after effect of those horrible days Sorkin writes about rather than his ten page paper “Break The Glass”.
2 DFL // Dec 7, 2009 at 12:20 pm
Maybe he’s a James Howard Kuntsler localist at heart and expect, nay hopes, that a depression will encourage a move back to the land and small stakeholdings.
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