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Amidst Financial and Political Chaos, Bipartisanship is A Must.

Julian Henry

What no one seems to realize is we are not just “giving” $700 billion to a bunch of guys on Wall Street, what we are doing is buying assets, which will most likely appreciate in the coming years, and hopefully help fill the infinite chasm that is our deficit. Or so the Government says. Yesterday Congress opposed the Paulson Plan. Even though Mccain supports the bill, Republicans, aware of the widespread unpopularity of the measure, saw an opportunity to garner support by trying to stall the bill in the house. It is, however, doubtful that the very politicians who opposed the bill can’t recognize the reasons that necessitate its implementation and the dangers of doing nothing. Two nights ago on Charlie Rose a very respected economist said, “I think all we can safely say about the recession is that it’s near the end of the beginning.” Republicans need to stop trying to improve their image in an effort to stall the burgeoning negative opinions of McCain and Palin and distance themselves from Bush, because they are effectively stalling action, and this is what we most sorely need.

Credit is what runs our country. It allows people to buy cars, groceries, and buy houses. Credit is the reason our position in the world today is that of, to quote Niall Ferguson, “the consumer of first resort.” Today, Wall Street can no longer give out credit, because it has no money. Banks cannot lend money to individuals and businesses. The resulting consequences, are that businesses are forced to cut expenses by laying people off, individuals cannot get loans for homes, tuition, and cars, and retirement accounts are threatened by stock market volatility. 

This past month has been characterized by acute hysteria and distrust. A large proportion of the American public believes that Paulson’s proposal is essentially bailing out individuals who, for the past decade, have been using the market in sneaky ways to gain themselves. Since the 80s a “shadow market,” comprised of derivatives and hedge funds, has enjoyed almost no regulation. To some extent these people have taken advantage of the American people, but what the American people need to understand, and what politicians should help facilitate the comprehension of, is that the consequences of prolonging this situation are probably much more serious than passing the proposal.

Yesterday Congress opposed the Paulson Plan, and yesterday the New York stock exchange lost $1.2 trillion, which stands in sharp contrast to the $700 billion Paulson, Alan Greenspan, Warren Buffet and associates find necessary to save our economy. 

The fall of Lehman Brothers did not help the loss of confidence. To contrast it with Bear Stearns, after Bear Sterns went under if you had money in Bear Sterns stock you lost money, but if they owed you money they could pay you back. In contrast, if Lehman owed you money you would be in trouble. This frightened many investors, who quickly took out their money, sending many market funds to their knees. 

What is going on now is massive deleveraging. To quote Floyd Norris of the New York Times, “people who borrowed too much have to pay it back, and the only way to pay it back is to sell assets, but if everyone sells assets exactly who’s going to buy them? This is where the Paulson Plan came in. It was going to buy assets at, it hopes, a price that was better than the current market price, but less than what the assets will eventually be worth.” 

Bipartisan action needs to be taken to secure the interests of the tax-payer.  Indeed, no one can confidently predict what the next few days or months will look like without a federal bailout, but it is also unsure what it will look like with one. What is certain is that bipartisan action must be taken to re-instill confidence in the markets. 

Jon Goldsmith 

Both candidates proved one thing. They are both ready and capable of leading the nation. The debate was close, well argued on all sides. However, Obama could have done a much better job. He could have delivered a knock-out blow. Obama did not tie McCain to Bush enough and did not outwardly blame the current economic recession on the Bush-McCain deregulation policies.

One thing Obama needed to do, and did, was end rumors that he would raise taxes for nearly all Americans when in fact he will lower them by 95%. Obama struck hard, saying, “the fundamentals of the economy have to be measured by whether or not the middle class is getting a fair shake…and when you look at [McCain's] tax policies you are neglecting people who are really struggling right now [and] it’s a continuation of the last eight years.” McCain definitely grew stronger as the topics of the debate shifted from the economy to foreign affairs. Foreign policy should have been a clean sweep for McCain, but Obama remained strong and tough and proved that he was not weak. McCain was perhaps strongest when he said, “I don’t think I need any on-the-job training…I am ready to go at it right now.” Overall no candidate got a knockout blow but Obama probably finished with a slight edge. 

More amusing, however, was the propaganda on both sides. Keith Olbermann made the assertion that McCain admitted the government tortured people, and dramatically lost the debate. And of course, Fox News claimed Obama was out of touch and that McCain had dominated.