Economy & Budget

What We Can Learn from Paulson’s Leadership

Treasury Secretary Henry Paulson has stepped up at the right time not only to inject much-needed liquidity into the financial system, but also to restore confidence throughout global markets.

Paulson has been instrumental in leading a global effort to avert a complete implosion of the global financial system. The unprecedented move in the stock markets yesterday — including the Dow Jones — are a testament that the extraordinary measures by the Treasury, Federal Reserve and FDIC, among other agencies, over the last month have been working to restore confidence in the system.

George Bush Saves the World

The Tony Auth cartoon in our morning paper shows a graph of the World Financial System with a snake moving downward and cut into pieces with each piece marked Britain, Japan, Europe, etc. Maybe they sent it up from Philadelphia and it just arrived.

Paul Krugman, the economist at The New York Times has likewise been pitching the end of the world as of last Friday. He’s since won a Nobel Prize for his visionary scenarios, most of which are dark. Krugman says he got into economics by reading Isaac Asimov in college. Possibly the Swedish elders thought Krugman an appropriate dog to catch the bone after declaring the entire American race to be too stupid and linear to receive a prize for literature. I wonder if the Swedes knew that Krugman’s economics is Asimov fundamentalism?

Sen. Obama's Myth that Reduction in Defense Spending Can Pay for Social Programs

The Obama campaign is quick in reminding us that if it were not for the Bush wars overseas in Iraq, we probably could lessen the financial crisis that we're now facing.

Anyone with a grasp of Economics 101 knows that their rhetoric doesn't match the reality of the dire situation that Americans face. Sen. Barack Obama (D-Ill.) would have us believe that it's military spending, and not the excessive social programs that he's advocating in his campaign, that will further damage and tank the U.S. economy.

Where is the money going to come from to pay for expensive new social programs that Mr. Obama seems determined to enact if elected? The military budget is an easy target, but even if we cut military spending to its post-war low, that is only .7 percent of GDP.

The Future

Peering through the glass darkly, it is hard to know what the future beholds.

Is the global collapse of the credit market, and the accompanying collapse of the stock market, a harbinger of bad things to come? Are we entering a truly dark period of global finance, a second Great Depression?

Or does the unprecedented cooperation of all of the world’s powers to combat this credit collapse foretell a more integrated global system, where cooperation replaces conflict?

Bailout Trumped Common Sense

With the financial markets sinking, Armstrong Williams compares the situation on Wall Street to that of his own family's experiences working a farm. Williams points out that not everyone gets a bailout, so why Wall Street?


Leading the Retreat to Reality

The winning candidates will face a real losing proposition when they actually have to take charge. They will finally have no choice but to deal with the question they've been avoiding like the plague during the campaign: How will they govern a population embittered by being suckered by its leaders? How will they inspire when the unavoidable truths come from those who were dismissed as naysayers? Will they be able to maintain a consensus while delivering a sometimes-harsh doses of reality, instead of our customary platitudes?

There are any number who can now call themselves "prophets without honor.” They are the one who have warned for decades about "profits without honor."

An Emerging Consensus?

David Broder and Joe Klein converge on a similar argument in their columns today: Barack Obama is likely to be the next president of the United States and he has yet to transition to a governing posture where he will have to share with the country the hard realities of the new economic landscape.

At yesterday’s New America Foundation panel discussion of top economists and budget experts at the National Press Club, there was a similar convergence on what the realities of that new economic landscape will look like — and it isn’t pretty.

Government-Created Jobs Will Put America Back to Work

When politicians tell voters that the government will create jobs through infrastructure programs, they do not realize that these programs may crowd out jobs in the private sector. The money for these infrastructure projects has to come from somewhere to pay for those government jobs.

When the government raises taxes to pay for “new” government-sponsored jobs, it takes that money from private businesses or consumers, thus reducing jobs in the private sector. Thus, usually, government spending does not result in a net increase in total jobs in the economy. Maintaining and upgrading our decaying infrastructure is important as an investment in our economy. It should not be a jobs-creation program but an investment program.

Sacrificing Reality

We always have to declare winners and losers. So I should point out it was a clear victory for Barack Obama that William Ayers did not attend the debate. He was not in the audience, was not part of the discussion. That's probably because even John McCain decided Ayers wasn't really relevant.

To maintain balance, I'll mention the absence of that other bomb-thrower. I mean Sarah Palin, of course. She was probably sitting in front of a TV set, watching the exchanges, listening intently as her campaign tutors explained what McCain and Obama were talking about.

There Was No Bailout; It is a Rescue Plan

Many people (including Yours Truly) were concerned that the $700 billion rescue plan was a coordinated effort to bail out the Wall Street executives whose firms contributed to the crisis that has consumed the global economy.

The more recent emergency measures by the Federal Reserve and central banks around the world since then should be evidence that the bailout was, in fact, a desperate but much-needed measure to keep the financial system intact and the infrastructure afloat. Furthermore, the abysmal performance of securities exchanges around the world serves as a good litmus test that this crisis goes well beyond the concern of executive compensation and golden parachutes.