Posts Tagged ‘economy’
The Dow Jones Industrials plunged another 730 points today falling sharply on rumors that we are already in a recession. Nationwide, in fact, economic indicators have pointed to a sharply slowed economy. Fed Chairman Bernanke said the economic situation – which had already begun to slow prior to the crisis – has worsened much more with the jitters on Wall Street. The White House and the Treasury Secretary continue to attempt to pump money directly into banks in order to loosen lending and hold off further declines in confidence and numbers on Wall Street to little affect.
Wall Street, it appears, has ideas of its own.
The Dow Jones industrials fell sharply again today settling at approximately 500 points down – 875 points down in the past two days. But the bad news doesn’t stop there – retirement accounts have lost over $2.2 Trillion, the Fed is sending money directly to businesses in an attempt to stop the free fall on Wall Street, and investors and the worldwide market is beginning to panic.
The $700 Billion bailout that congress debated just recently is now looking like it might not have been enough or it might have been a bad idea – depending on your point of view of course. One thing is certain, how the US Government handles this crisis over the next few months or even weeks will be crucial.
President Bush, who had checked out mentally a few months ago, now has a new reason to worry – one that even eclipses the war in Iraq – the financial collapse of our country. Unless this crisis is handled very gingerly, 2008 may begin to look a lot like 1929.
In trading around the world, the US bailout seems unable to stop a global plunge. Russian trading fell 15% forcing a market closure. Trading in London, Paris, and Frankfurt all fell more than 6%. Trading in Asian markets has fallen 4% so far. It is anticipated that trading in the US will follow world trading by losing more market share.
The operative phrase that is repeated in report after report is “investors are losing confidence”. It seems clear now, that the US stock plunge is far from over. We can expect more of a slide today when the NYSE opens.
Despite early bipartisan support, including the support of the President and Housing Secretary, the GOP in the House, by a 2-to-1 margin voted against the bill that would bail out the financial sector and allegedly stabilize the economy. Democrats, a majority of whom voted in favor of the bill, were aghast when the Republican GOP leadership opposed the bill. This bill was – after all – not the perfect Democratic bill. In fact, what is perhaps the most interesting detail of this whole mess is that the Democrats could have passed the bill in the house along party lines if they had written a bill that the Democrats could all support. Instead, they wrote a bill trying to address part of what they wanted and part of what the GOP wanted. Unfortunately, the GOP leadership had different thoughts – that is to say – we want it our way or the highway.
As a result, the GOP leadership – ignoring what is clearly best for our country – decided to scuttle the bill and in the end, defecting Democrats aided in the 2-to-1 GOP vote against the bill. Since that event, the stock market has taken the single largest plunge in it’s history – more than that of black friday – falling 777 points. That loss translates to approximately a 7% drop in the stock market.
A little advice to Democrats: write a bill that all Democrats can support – if the GOP is going to trash a gift then write the bill you really want and let the Senate and House negotiate the resulting bill.
After 30 years of the Republican Party pushing deregulation, the events of the past few days have been nothing less than a full repudiation of the free market pundits. Free Market, for those that don’t know, is a euphamism for more deregulation, less accountability, and more profits – often – at consumers’ detriment and the corporation’s benefit. The vision that Ronald Reagan helped to embolden during his Presidency, and Republicans have pushed for more than 30 years, has led to the virtual collapse of the financial market in this country. Phrases like “black friday” and “worst condition since the great depression” have now been mentioned more frequently in the recent turmoil. Lehman Brothers, Bear Stearns, AIG, and Fannie Mae & Freddie Mac are just the beginning. Although the government let Lehman Brothers fall, they are bailing out companies at a record cost to taxpayers and further helping to destabalize the economy in some respects. Republicans who decried the big government regulation of the past are now forced to see the fruit of their labors. Deregulation (er…I mean Free Market) has opened the way for risky investments by banks, insurance companies, and others which, in turn, has led to the subprime mortgage crisis. Now the deregulation proponents are actually advocating government intervention – now that deregulation has screwed up the economy. This is, of course, contrary to the Free Market pundits philosophy: let the market handle itself. Candidate McCain, a self-proclaimed “deregulator” has voted to support deregulation in every bill that asked for it for the past 26 years. In response to this crisis, however, McCain wants to clean up Wall Street. This is a bit like asking the fox to guard the hen house. McCain’s entire political career has supported deregulation. His attempts to appear as the agent of change is completely dubious. Let’s not forget, McCain is the man who hired a team of lobbyists to staff his campaign, was involved in the Keating 5 scandal, and incredibly, still considers the economy as strong. Given the state of the economy, the energy crisis, out of control spending for both wars, and a continued push for deregulation and lower taxes, it is time for a real change – not more of the same. McCain is absolutely more of the same. No doubt about it. Palin, it appears, it worse than McCain since she is to the right of Bush. It is time for all of our leaders to responsibly address this crisis and admit that deregulation is at the heart of the problem. John McCain, however, doesn’t see it that way – until forced to. He was against the AIG bailout and then for it. He was against regulation and then for it.
Why doesn’t John McCain see a problem with the economy? Maybe he does – but doesn’t want to admit culpability for his lifelong support of deregulation.
As yet another major financial institution goes down in flames, we are reminded again – during an election year – that despite all the distractions, it is still all about the economy. Republican candidate John McCain would love you to think it’s all about his military service, gay marriage, or several other distractions. It is, however, much simpler than that. To quote Ronald Reagan, “Are you better off now than you were four years ago?”
The answer is equally simple: no. The economy is in shambles, job loss is increasing, energy costs are skyrocketing, and our financial institutions are crumbling.
Alan Greenspan, the respected former Chairman of the Fed, has been prominently espousing his point of view on just what is going on and how to handle (or not handle it). Greenspan is, for instance, dead certain that McCain’s tax cut plan is disasterous for the country. You cannot cut 3.3 trillion dollars in taxes and continue to spend 10 billion a month in Iraq and Afghanistan. Plain and simple.
Greenspan also notes that the more financial institutions will fail, but the extent of the impact of such failure is not necessarily bad – that will depend on our leadership’s response to this crisis.
See we are….ooops. Guess we’re in trouble.