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Government panic has fueled crisis
Susan Lee
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TEXT OF COMMENTARY
Renita Jablonski: We're launching an occasional series today that looks at possible solutions for the financial crisis. The first installment of "What's the Fix?" comes with thoughts on the government's part in all of this. Here's commentator Susan Lee.
Susan Lee: We're about six months into the worst financial crisis since the Great Depression. The question on everybody's mind: How do we get out of this? Well, I've got some bad news here: There is no way out -- not after Washington showed it can panic with the best of them.
Consider what's happened. The government has motored out a $700 billion plus bailout. That's a lot of bucks considering nobody even argued the bailout would work. In fact, the only impact on which everybody agrees is that the bailout will push the budget deficit up to almost a trillion dollars and require higher and higher taxes.
The government has also nationalized almost half the banking system. And so far, the only result is that banks want still more money. And don't forget Fannie and Freddie. By taking over these two mortgage giants, the government has pretty much taken over the home-mortgage market. Yet mortgage rates have climbed, while house prices continue to drop.
OK, maybe that's unfair -- these things take a while to work. But this display of utter panic has resulted in massive uncertainty. And there's nothing the markets hate more -- and fear more -- than uncertainty. No wonder investors have become so risk averse they've taken trillion of dollars out of the stock market.
Six months ago, the country was headed into a recession. The drop in home values made that inevitable. The best course of action would have been to take our very large lumps. Most likely that would've meant a short, maybe steep, recession. And yes, lots of firms in the financial sector would have gone bust and investors would have lost money.
But now? By aggravating the financial crisis and scaring the pants off investors, the federal government has almost insured a very bad, very long recession. It's not often one gets to quote Napoleon, but here goes: "In politics, stupidity is not a handicap."
Jablonski: Economist Susan Lee writes a weekly column for Forbes.com.
I believe that now is the time to pull the rains up on the speeding horse and get him back down to a gallop. We are spinning off into oblivion and will reach a point of no return. Most situations can be better handled by first slowing them down and providing more time to think things out. Where I believe at the present pace where grasping at straws.
One of the things that I believe that government should sincerely focus on is there credibility which I feel they are vastly loosing ground, Ex. By selling bonds and eventually raising the deficit which will have them looking to recoup funds by going into the Social Security system is wrong and going to end up in a tragic mistake. This will definitely loose the peoples trust in there government, things that they have worked there whole life for seemingly to become weaker instead of what they should becoming, stronger.
It would seem at this present time that we have a system of bureaucrats, swamped with groups of lobbyist, all acting within the interest of special interest groups. And these bail outs are seeming to take the shape that they are now more than these special groups putting there hand in the cookie jar one more team before the regime presently in office changes hands. It’s to me almost appalling that it take the act of an official, in the nature of a subpoena, to get the right officials to give out the whereabouts of the distribution of 320 Billion dollars in bailouts. This would make one feel that what ever is happening with these funds is not being legitimately monitored.
I think that the American people should be outraged, when ever in my lifetime have I ever seen the government come out and help out the little ma and pa businesses around the country that give, give and give in taxes and where is there hand in this cookie jar of wealth. Answer: struggle with the system and beg for a lone to keep their business afloat with the same people who just get there very same monies handed to them. To me the backbone of are total system is these people and they disserve the greatest amount of help not the fat cat. It is hard to find anyone bailing out these people. I think truthfully I would have to go back to comments made by a renowned attorney Jerry Spence when he said in one of his books, take the lobbyist out of Washington. There are many more issues but once again the focal point has to be to regain the confidence to the American people because I think that our government is just a stone toss away from loosing it. The principals of the United States Constitution have to be maintained in full. I could probably go on much longer but believe this is enough.
