Current economic crisis and politics

The current election is certainly an interesting one. The economic situation has turned things on their head and it has probably given Senator Obama the election because it takes the primary strong-point of the Republicans, foreign policy, away. While McCain may have some reasonable ideas regarding the economy, he seems unable to articulate them in a way that gains him any additional support beyond his base. I would be surprised if this election is close after all.

As one may recall, the president/party in the White House at the time of financial problems usually takes the blame, whether or not their policies actually caused the problem. In the case of the current crisis, years of encouraging lenders to grant loans to high-risk borrowers have come back to haunt the banking industry, particularly Fannie Mae and Freddie Mac. During the last 15 years or so, there have been regular efforts on the part of the Democratic Party to assist lower income individuals in getting home loans. This has been against the council of numerous economists who were not enthusiastic about the housing boom that was created. Remember, booms tend to bust over time. Hear that? That was the sound of a bust! Republicans are certainly not without dirty hands in this, but their issues tend to deal more with deregulation efforts. Many GOP members did warn that Fannie and Freddie were going to be unstable if lending practices were not closely observed. Those calls were poo-poo'd as unfriendly to lower class borrowers. Now the government has had to step in to rescue these institutions as substantial taxpayer expense.

The current stock market instability is very scary but probably temporary. What may prolong it is the insistance on the part of government to interfere too much. It has also gone global because we are such a major force in the economies of the world. Willingness on the part of individual countries to stabilize their situations will play a role in the length of the crisis. Some may not play along with the rest of the crowd for nationalist reasons. Should that occur, things could drag on longer.

Market "panics" are a part of our economic history. Panics over banking and speculation have taken place as early as 1819 and reemerged periodically every twenty years or so. This convinces some that the markets are cyclical; the classic theory of economics. During the early phase of the Great Depression, many in the U.S. government believed this to be the case. In the 1932 election, Hoover took a drubbing from FDR because the latter promised CHANGE from the "failed policies" of the Republicans. Whether it was Republican policies or not, poor Hoover, only in office for a few months when the Crash occurred, took the blame and was unable to climb out from under the economic crisis of his day. Now here we are with a new major crisis and a party to blame. Astute voters will note that Congress has been dominated by the Democrats for the last two years, but because of an unfortunate vendetta against Bush, they allowed themselves to lose focus on their agenda. This Congress faces unprecedented low approval because of their lack of action on the things that they promised to fix. I have been saying for some time (at least five years!) that partisanship from BOTH parties has stalled progress for the American people. NOW is the time to break that practice. I am not convinced that EITHER candidate for president is truly willing to do what must be done - true bipartisan efforts. Despite claims otherwise, McCain is a proven agent of bipartisan action. But Congress will play a far more important role in breaking the partisan chains. The President MUST lead us in that direction. The Congress will have to bring that spirit forward for REAL change to occur.