Suskind Has 'Confidence' He's Helping U.S.

NEW HAVEN, Conn. (MainStreet) -- The backlash that struck Ron Suskind after publication of his newest book, Confidence Men, has been replaced by a backlash to the backlash. Sources' claims they were misquoted or taken out of context have been answered or faded, as have the noting of factual inaccuracies, and the Pulitzer Prize winner and best-selling author has claimed the final word: He'll wait for history to decide whether the book, a portrait of the early economic policies of the Obama White House, stands on its own.

Well, not quite the final word.
Pulitzer Prize winner Ron Suskind says journalism plays a role in encouraging the health of the country

Within the gothic stone sanctuary of Yale Law School, in a wood-paneled hall amid portraits of leading legal scholars and introduced by Greg Fleming, president of Morgan Stanley ( MS)'s investment management division and an '88 graduate, Suskind had a bit more to say.

First, in an implicit defense of the book, he explained how he gets high-profile subjects to open up and really share their knowledge: He encourage them to "trust the truth," he said, because bringing the truth out into the open is ultimately best for everyone, especially the country as a whole.

"People act for good enough reasons, good enough that intent flows to action -- the thing you can see. Know a person's 'good enough' reasons and you know them almost as well as you can know another. If you don't know the 'good enough' reasons, then your understanding is deficient and you have to dig deeper," he said. "I use that rule everywhere. Even in big noisy books about those in power. I wanted to try to discover how we got into this mess to see if there are some arrows for getting out."

Journalism plays a role in encouraging the health of the country, he said.

"My job is to try to do everything I can to allow us to exercise as much informed consent as possible by showing how and why the leaders in our present age do what they do. What drives them? Why is it that they do what they do?" Suskind said.

In Confidence Men Suskind looks back at how the deregulation of financial services in the early 1980s was meant to solve some of the problems of stagflation plaguing the country. Unfortunately, it repeated a mistake solved in England in the late 1700s when parliament passed the concept of insurable interest -- saying people can insure only something in which they have legitimate interest -- to protect against insurance abuses, Suskind said.

The financial "innovations" of the '80s led to the unraveling of insurable interest, he said, and debt was packaged and sold off, allowing wild speculation to become the center of financial capital via the outsourcing of the risk of debt going bad.

Enter Barack Obama, candidate for president, masterfully calling for dealing with an ailing financial sector -- then becoming president and being unable to accomplish what he wanted.

Suskind recounts how Robert Wolf, a campaign contributor and Wall Street insider, called Obama in 2007 from an enormous yacht when the hedge fund of his former employee started melting down. "I hate to bring you bad news on your birthday, and you know I've never advised you; that's not my role. But you need to see what I'm seeing, from where I sit," Wolf told Obama, according to Suskind. "This is a market-driven disaster that could crush Wall Street and with it the whole U.S. economy. I mean, Barack, I just thought you should know."

Obama responded by bringing Wolf on as part of a brilliant economic team, but the team didn't make it into the White House.

"Wall Street was thinking that if Obama wins with this economic team around him -- Volcker, Goolsbee, Reich -- we're toast. Of course financial services should not account for 41% of corporate profits in 2007. Of course we're sitting on top of a capital cartel that has made a decision to short America," Suskind said, describing Wall Streeters who privatize profits and nationalized debts by getting around the whole concept of insurable interest through developing increasingly sophisticated financial instruments.

When Obama was elected he switched out Wolf, Volcker and the rest of the team for Larry Summers and Tim Geithner, losing control of his own White House.

Obama is a brilliant man and an incredibly charismatic leader, Suskind said, but is only human, under unrelenting pressure and a belated learner that after inspiring with speeches comes the challenge to make word and deed coherent.

At the very end of Confidence Men Suskind quotes Obama as saying he's learned that "leadership in this office is not a matter of you being confident. Leadership in this office is a matter of helping the American people feel confident" -- the reason, Suskind said, "why the book is called Confidence Men."

Jonathan Macey, the Sam Harris professor of corporate law, corporate finance and securities law at Yale, noted the challenge for a president to instill confidence in a political climate in which it's incredibly difficult to pass legislation without a crisis.

While Suskind acknowledged the words of former Obama White House Chief of Staff Rahm Emanuel in saying politicians should "Never let a crisis go to waste," that wasn't the author's final word on the matter.

"The fact that we need to move from crisis to crisis to solve problems is a sign that the system is broken," he said.

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This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

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