When Bill Clinton handed the keys to the White House over to George W. Bush in January 2001, a barrel of crude oil cost under $20, inflation was under control, while GNP growth was more than respectable. What else? On the budgetary front, the government had cleared three consecutive surpluses. In less time than it takes to describe it, that legacy was squandered.

    The Bush administration's management of the economy began with a mistake that could easily have been avoided had said administration observed a minimum of rationality or had it studied the lessons of very recent history. Let me explain. In the course of the first year of his first term, Bush, in conformity with an electoral promise, ordained a reduction in the taxes paid by the wealthiest fringe of the population, along with a reduction in inheritance taxes. In short, he did what Reagan had done in his time.

    Bush did this even as a widely commented study highlighted the perverse effects of that policy. In fact, after having analyzed the financial flows consequent to the tax benefits Reagan granted, an economist from Warwick University in the United Kingdom had observed that with the money they saved, the rich bought Porsches or BMWs, drank French wine and wore Italian clothes, or vice versa. In short, those tax reductions proved to be indirect subsidies to the European luxury goods industry, or, if you prefer, incitation to capital export.

    I'll skip some other episodes to focus on this commentary by Vice President Dick Cheney: "Reagan proved deficits don't matter." So that's how the American Executive's No. 2 justified their dereliction in that regard. It is true that since it's in no one's interest for the United States to collapse economically, foreigners - notably Germany, China and Japan - bought billions and billions of debts Made in USA.

    It is nonetheless true that that irresponsibility resulted in a string of budgetary records. For the current year, the White House forecasts a $482 billion deficit - or the record in absolute terms. Most dreadfully, the expenses pertaining to military operations in Iraq and Afghanistan and to the support plan for real estate owners are not consolidated into this figure. Among other macro-economic consequences, this policy has resulted in this one: the Euro - or crude oil - has replaced the dollar as a safe haven investment for many foreign investors.

    With the I-don't-give-a-f--- - there's no other term for it - example coming from on high, the universe of finance transformed itself into a pickpockets' society frequented exclusively by swindlers. The latest among them? Freddie Mac president Richard F. Syron. In a long article published in Tuesday's New York Times, we learn that the risk management chief for this mortgage mastodon issued a memorandum in 2004 in which he warned senior management of the dangers inherent in subprimes. He suggested a modification of the strategy that had been conceived for Freddie's development in order to safeguard its financial health from the repercussions he called inevitable if nothing were done.

    Rather than listen to the voice of prudence - or rather of healthy management - Syron cultivated indifference. Like some of his homologues at CitiGroup, Merrill Lynch, Bear Stearns and other financial companies, he preferred to continue the collision course Freddie was on for the good and simple reason that it was much more profitable ... for him! Between 2003 and today, Mr. Syron has collected $38 million in performance bonuses. During that period, Freddie Mac 's market capitalization melted by ... $80 billion. Hello, havoc!

    Today, poor Ben Bernanke, the Federal Reserve boss, is between a rock and a hard place. He's confronted with the economic Janus. Tails, he has to fight recession. Heads, he has to confront the ever-more-marked pressures of inflation. For the moment, he's concentrating the tools at his disposal on the fight against recession. In fact, he decided yesterday not to increase the cost of money so as not to add to the setbacks stemming from the bursting of the real estate bubble.

    Meanwhile, let us hope that the powers the Stock Exchange regulator and some Federal prosecutors are calling for be speedily granted so that those responsible for this financial quagmire, this economic mess, finally answer for their behavior.

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    Translation: Truthout French language editor Leslie Thatcher.