Posts Tagged ‘George Bush’
I was listening to a WBEN the other day, a local Buffalo news and talk show radio station, when I heard a clip from the morning show hosted by Tom Bowerly. It immediately struck me as insanely illogical.
Bowerly, a typical radio conservative talk show host, sticks to his anti-Democrat, anti-Obama talking points. In this particular clip, Bowerly was commenting on Barak Obama’s Super Bowl Sunday interview, in which he jokingly mused how he was bumped off the cover of a celebrity magazine, and replaced by an overweight Jessica Simpson.
Question. What kind of recipe do you get when you have a Congressional election year, a financial crisis, and misinformed voter anger? A recipe for disaster.
And now our politicians in Washington are, for all intensive purposes, are sitting on their hands by voting down the $700B bailout package in the House today. In response the stock market had it’s worst day in history in points lost and it’s worst percentage drop since 1987. All of this following on the heels of the beating Wall Street has suffered since September 18th.
We are witnessing a colossal tragedy unfolding if it continues. What is occurring in Washington, alongside an angry populace fuming at the “greed” of Wall Street, is the equivalent of driving a car with your eyes closed down a winding mountain road. There is a confluence of forces playing their part in this Shakespearean tragedy, none of which are constructive to our future economic health.
I expect when our elected officials to cast their vote on any bill, especially a bill that of such critical importance, to decide based on the merits of the bill. Any other factors that enter into the decision making process are unacceptable. Yet, today some House Republicans blamed “blamed Ms. Pelosi for a speech before the vote that disdained President Bush’s economic policies, and did so, in the opinion of the speaker’s critics, in too partisan a way,” to explain their nay votes. Republican Jeb Hensarling said the bailout package would the nation on “the slippery slope to socialism,” and added that saddle taxpayers with “the mother of all debt.”
Democrats of course fingered Republicans in the typical partisan merry-go-round that has become standard practice. In the end, all Washington accomplished today was politicizing the most important event of a generation.
Understanding why the vote became politicized is so perfectly simple, yet infuriatingly frustrating. All it requires is a look at the vote roll. Another reason opponents of the bailout package gave for voting no was that they had “encountered too much hostility for the bill among their constituents, and were worried that a vote in favor would be political suicide.” Not surprisingly, in an election year, political suicide can be onset by taking action that might jeopardize your reelection. Don’t rattle the cage too much. People might get scared.
I came across the Robot Pirate Ninja blog today which had an interesting article on this very topic. The post linked to FiveThirtyEight were political suicide is explained in the most simpliest of terms. 38 incumbent Congressman who are in tightly contested races voted on the bailout package. Only 8 of the 30 voted in favor. That’s a .211 average. Of those not in a contested election race, 197 voted for and 198 voted against. Almost a 50/50 split. Is this just a statistical anamoly or did 30 elected Representatives decide their vote on what’s best for keeping them in Washington? I’ll take the former and run with it.
Following the introduction of the bailout package by President Bush, a Gallup poll showed 78% of American’s supported some form of bailout package. But only 22% of voters favored Bush’s proposal while 56% favored a different plan other then Bush’s. Clearly, most American’s favor some form of a bailout package.
I contend that the 56% of voters who favored something other then the proposed plan responded on their deep distrust of Bush(note his 22% rating in polls), and a backlash reaction to the idea of using tax payer dollars to rescue Wall Street. Bush sits as a lame duck President with an unbearable approval rating. Any proposal he makes is going to be met with such ferocious backlash it’s destined to fight an uphill battle. That hill has about a 78% incline.
Combine that with a misconception among the populace that the $700B in taxpayer money is going straight into the pockets of corrupt, greed driven corporations, it creates an irrational fear that the bailout package is the epitome of Wall Street excess and irresponsibility. It’s an emotional reaction, and these types of reactions incite a disregard for analysis. Logic bows in the face of feverish passion. I have read so many blogs that are a mouthpiece for a blinding rage pointed at Wall Street. I’ve talked to many people who ardently contend that they should not be spending their dollars to save money hungry con artists. The bailout package has become something deeply personal for many people.
Times of crisis are one of the few times our elected officials start taking the pulse of their constituents. They have almost assuredly taken note of the wrath that’s resonating throughout our country. They are certainly not going to poke an angry bear. It just might bite.
Some of this would be alleviated by an American populace that viewed the bailout with less theatrics and with more understanding of the economic implication in having a massive bank failure in this country. What we face is not a singular, isolated event. There is a cascade of dominos that follow if we allow banks to crumple.
Banks holding trillions of dollars in illiquid assets amass massive debt. Without capitol reserves, banks drastically reduce corporate loans. Corporate entities unable to raise needed capitol investment scale back their production. The supply and demand equilibrium becomes unbalanced and price delfation sets in. Existing assets lose their value sending businesses scrambling to stabilize their capitol reserves. Lacking necessary capitol reserves and unable to sustain operations, some businesses shut down completely. Existing business hoard capitol reserves and make severe cut backs. The unemployment rate spikes upwards. Lost home income translates into a plummet in consumer spending. Supply and demand ratios become more imbalanced and deflation continues. With reduced loans, banks start calling in their loans. Borrowers, already struggling to meet their own capitol needs, default further reducing existing banks ability to lend. Squeezed with minimal capitol reserves and debt either are unable to pay their loans. A further string of bank closing occur.
The vicious cycle that unfolds goes on and on. This sort of cycle has taken place once before in this country and that was the Great Depression. Understand that bailing out the financial institutions that are now treading water is to put a stop to the falling domino’s – to stop this country from experiencing a massive bank failure and the subsequent evaporation of the necessary capitol to keep the economy functioning. $700B is a small amount of money to potentially to minimize a catastrophic risk.
Handcuffed by political preservation, the gears have ground to a halt. Let us all hope that there are enough of our elected officials in Washington who aren’t driven by partisan politicization, and can hash out a needed bailout package. In the end, I do believe some sort of package will go through. Yes, our tax payer dollar will go to corporate America. And yes, it’s going to save them from running aground. But it’s also going to save our jobs, our health insurance, and our retirement benefits.
This isn’t the first time the government has had to save the free market. It happened once before but not before plenty of foot dragging. In if helps, last time this happened the government came out recouping our tax dollars and then some.