As the race for President heats up, issues are sometimes being discussed. At late, the topic of discussion seems to be the economy. As the economy has hit a bump due to the bursting of the bubble in the housing market, several financial institutions have gone or are on the verge of going bankrupt. As result the government is stepping in, in an attempt to head off the ripple effect that these collapses may cause.
It should be noted that the house flipping craze which caused many wide eyed risk takers to enter into over the past 5 years, have found out that they bit off more than could chew. The mortgages taken out on houses that they never intended to live in have come due and they could no longer afford the gambles that they made. The problem is that the housing market turned and after these house flippers invested tons of money into these homes in order to increase there values and sell them for a whopping profit, they find themselves without enough money to pay the mortgages that they used to buy the property in the first place.
Were it not for these risk takers willingness to overextend themselves the lending markets would not have overextended themselves. But because they have the chickens are coming home to roost and as result many innocent people who did not make such gambles are at risk. The lack of return to lenders from bankrupt gamblers have forced lenders to tighten up and the market has shrunk.
Now I do not presume to have the answers, I am not Alan Greenspan and I offer to you that Alan Greenspan did not have the answers either but I will say this, the American people did not enter into the risks that the house flipping, get rich quick, entrepreneurs did and although we are all suffering because of them, we should not be forced to bail them out.
If Joe Blow goes to the Kentucky Derby and places life savings on BushWonFloriduh to win and subsequently loses because Clinton-Lied came in first, should the federal reserve be forced to come in and subsidize Joe Blow?
Now of course the intricacies of the economy go beyond that analogy and there is a need for the government to step in and enact necessary measures that prevent the nation from entering into an economic unraveling due to a collapse that could lead to higher unemployment and a further shrinking of the economy and they are doing so. But this leads us back to this campaign for President.
Barack “America” and John McCain are now tussling over the economy. Obama blames Republicans, the current administration and John McCain for the closing of Lehman Bros., the takeover of FannieMae and Mac and the pending circumstances surrounding A.I.G… He wants more regulation. Given the circumstances I can say that I agree. And so does John McCain who unlike Barack Obama, called for regulations that would leave the national economy at less risk than it has been. The difference is the extent to which that the regulation goes.
I believe Obama’s liberal drive for control will lead to overregulation, which without his realizing or understanding, would lead to an eventual shrinking of the economy, just as it has done in the past when liberal overregulation killed certain market sectors and destroyed economic growth.
On top of this Barack Obama leads his charge by going on a political rant that accuses John McCain of being out of touch. He makes this accusation based on the fact that McCain believes our economy is sound.
Well I have news for Barack, McCain is right. Despite the collapse of a financial institution that overextended itself and a sector of the housing market that saw it’s over inflated market bubble burst , in September, the economy posted a strong gain of 3.3 percent at an annual rate in the second quarter. This was led by growth in consumer spending, exports, and the recent stimulus package. According to the Bureau of Labor Statistics the level of growth demonstrated the “resilience of the economy in the face of high energy prices, a weak housing market, and difficulties in the financial markets“.
On top of that, orders for durable goods have been rising in recent months and productivity growth over the past four quarters has been strong at 3.4 percent – above the averages for each of the past three decades over the course of the Administration.
What this amounts to is the fact that despite recent troubles in certain sectors, the American economy is sound. Sound enough to not fall apart due to crisis in anyone sector.
Unlike the house flippers who helped to bring on the problems that we are seeing unfold, the American economy and it’s people do not put all our eggs in one basket.
According to James Sherk, an analyst and expert in labor economics, macroeconomics, fiscal policy, and economic growth, politicians like Obama, in the case of the economy, “should not get away with spinning gold into straw to score political points. While the economy is not doing as well as it did at the height of the tech bubble, it is still growing strongly”.
In other words the economy is “sound” and over exaggerated claims that the sky is falling should not be made by a politician who has yet to demonstrate that he has the judgment to do what is right.
John McCain warned of the need to regulate against the type of activity that led to the headlines we are reading today, Barack Obama did not. Yet Obama comes before us to say that he can solve the problem and he does so by overreaching and offering the type of regulation that would take the word “free” out of “free markets”. What John McCain has offered are measures that would prevent the type of overextension that is causing the federal government to now step in and share in the burden of.
What John McCain is doing is telling the truth. He is not trying to create a national downturn in the economy so that he can come off as the messianic savior that Barack “America” makes himself out to be. John McCain is not trying to make things seem worse so that he can get elected. He is the telling the truth when he says “the American economy is sound”. Were it not, we would not be able to endure the headlines that we read today.