Conditions are less than ideal, let us say, for President
George W. Bush’s last state of the union speech, to be delivered today. This
is an administration that had precious little to boast about even before the
economy began to nose-dive – a calamity that may not yet be plain in the figures
but was certified by the Federal Reserve’s dramatic interest
rate cut last week. One wonders, how much worse can things get for this
White House?

For months, the need to address economic anxiety has been a well-established
theme in the campaigns of all the presidential candidates but until recently it
was possible for Republicans to talk as though the ongoing expansion were a
flawed success. When Ben Bernanke, the Fed chairman, took the economy’s
temperature a week ago and recoiled like the figure in Edvard Munch’s “The
Scream”, that calm posture was no longer available. Alarm on Wall Street is
business as usual; alarm verging on panic at the Federal Reserve is more
difficult to shrug off.

The president’s haste to design a fiscal-stimulus plan in co-operation with
Congressional Democrats was almost as disconcerting. The deal, still tentative
until the Senate has had its say, underscores the pessimism. In its own right
(even assuming that it moves briskly and intact back to the president for his
signature) the proposal is a puny initiative. Its mere existence, though, is a
weighty political fact.

You can read the rest of this FT column here.