I find it difficult to realize that I started writing “Doc’s Prescription” in March 2008. During the subsequent decade, both our economy and I reached rock bottom and pinnacles.
My first column dealt with the government-assisted takeover of Bear Stearns by J.P Morgan. I think it is fair to say that I and almost the entire financial community had failed to recognize that the rot associated with sub-prime mortgages threatened the entire global economic system. Fortunately, under the leadership of Federal Reserve Chairman Ben Bernanke and Secretary of the Treasury Hank Paulson, we muddled through.
To stem the financial meltdown, Bernanke initially used the central bank’s traditional role as lender of last resort by providing short-term liquidity to financial institutions.
After the bankruptcy of Lehman Brothers and the liquidity crisis of American Insurance Group, Paulson and Bernanke understood that they needed to take draconian measures to prevent another Great Depression. Our central bank took such unprecedented steps as guaranteeing trillions of dollars on commercial paper and money market funds.
On October 3, 2008, Congress authorized The Troubled Asset Relief Program, which authorized $700 billion to invest, to make loans and to guarantee assets to financial institutions.
Interestingly, just a few paragraphs in the TARP law allowed our government to purchase preferred stock in eight banks. Today, we remember the TARP program almost exclusively for its bailout of Wall Street.
In July 2011, Sen. Bernie Sanders cited an audit by the General Accountability Office that showed the Federal Reserve had provided more than $16 trillion in financial assistance to some of the largest financial institutions. “This is a clear case of socialism for the rich, and rugged, you’re-on-your-own individualism for everyone else,” Sanders said. His remarks resonated with many on Main Street.
The Fed also instituted quantitative easing, a program that expanded its balance sheet from $800 billion to $4.5 trillion and helped reduce long-term interest rates, ease the mortgage-backed security crisis and bring about the record increases in the stock market.
The effects of the 2008-2009 financial crises were felt for years. But the Federal Reserve worked in coordination with other central banks and the world economic system recovered. Today, every major developed region in the world is doing well for the first time in my life.
Global stock markets, which are measures of the public’s confidence in private corporations, have reached record levels. U.S. unemployment is a relatively low 4.1 percent. While America still suffers from severe income inequality, wages have increased. My prescription would be to encourage fiscal programs that lift our economy with the hope that “a rising tide lifts all boats.”
I worry about our government’s debt, now totaling some $20 trillion, and the likelihood of $1 trillion annual deficits going forward. But we have yet to experience the symptoms I fear — expenditures on interest that crowd out traditional government programs, higher interest rates, and inflation exceeding the Fed’s target of 2 percent.
Like the economy in the last 10 years, I also have suffered grievous losses and have been able to persevere. In 2008 and 2009, my net worth declined 40 percent. To recover, I took over direct management of most of my remaining assets. The tripling of the stock market since March 2009 has enabled me to enhance my assets to a personal record.
Beyond my financial reversals, my beloved wife, Eloise, died of cancer in 2011. To honor her memory, I established the Eloise Werlin Park near the eastern end of John Ringling Causeway in 2015. In 2017, I was diagnosed with colon cancer. In response, I am hosting a cancer fundraiser, called Coming Together Against Cancer (www.CTAC.Life). At this March 24 event at the park, physicians will discuss state-of-the-art technological innovations to defeat cancer.
I believe that, just as we defeated polio, we will conquer cancer. Hopefully, on my 20th anniversary writing for the Herald-Tribune, I can write rapturously about a healthier world and its inhabitants.
Originally published in the Sarasota Herald-Tribune
