Posted by
David Zublick on Sunday, September 21, 2008 2:57:55 PM
The last two weeks have been a wild ride for the United States economy
and for the presidential campaigns. The stock market has taken a
tremendous beating, and financial institutions once thought of as
solid, have now reached the verge of collapse under the weight of bad
decisions and lack of oversight.
The government has taken an
unprecedented step at a bailout plan that will cost up to a trillion
dollars of taxpayer money, while offering no guarantees that it will
stop the bleeding. Treasury Henry
Paulson,
appearing on Fox News Sunday, said that our nation's still frozen
credit markets are fragile, urging congress to act quickly on a $700
billion dollar package for financial firms. This plan will let the
federal government buy up bad mortgages to prevent a complete economic
meltdown. Not since the Great Depression has a rescue of such magnitude
been attempted.
This legislation grants Treasury Secretary
Paulson
extraordinary powers to fund or buy mortgage assets from any U.S.-based
financial institution, but limits his buying power to $700 billion
dollars.
Congress and the Bush administration were to negotiate
throughout the weekend in hopes of hashing out the details of this
plan, which
Paulson admitted offers no guarantees that further financial bleeding would not occur.
Politically, both the McCain and
Obama campaigns took potshots at one another, with
Barack Obama
painting John McCain as a free-market buccaneer who until this past
week championed the kind of deregulation that led to this crisis.
McCain has
portrayed Obama
as having ties to Fannie Mae and Freddie Mac, and called for more
oversight and government intervention. McCain has also been highly
critical of the idea of bailouts.
While this week's presidential
debates will focus on foreign policy, it's clear that the economy has
taken center stage as the pivotal issue in this election cycle. A poor
economy has traditionally favored the Democrats, yet
Barack Obama
has said he will hold off on announcing what he would to to act in this
situation. McCain, on the other hand, has said he would call for the
creation of something he referred to as a Mortgage and Financial
Institutions trust, which would identify problems in an institution and
solve them before they go bust.
It will be interesting to see what congress comes up with in the next few days. Jon
Kyl, the number man on the Finance Committee, and
Chuck Schumer,
chairman of the Joint Economic Committee, said there was little better
than a 50 percent chance that a package will be hammered out by the end
of this week.
Strong conservatives, although ceding that not acting in such a dramatic way might lead to the collapse
of the economy, nonetheless cringe at the thought of the government
taking over control and saving private institutions that go belly-up
due to poor decision making and bad leadership.
Whatever
happens, the United States debt will increase to never before seen
levels, and without any assurances that this bailout will work.
Listen to America Talks Monday through Friday at 6 pm eastern time at www.blogtalkradio.com/americatalks. Visit our website at www.americatalks.com.