Tag Archives: 2008 election

Breakdown of Legitimacy: How the Disastrous Bailout Passed

I do not profess to know much on economics, especially not an economy as complex as our nation’s. But I do have a brain, along with a few years in business school. And for the past two weeks since this “financial crisis” has been looming, I’ve devoted many hours to researching this plan. Neither the mainstream nor conservative media has been much help.

Americans must realize what role the 24/7 news cycle has played in this debacle. For the past year or so, the words “credit”, “housing” and “financial” could not be said on-air without being followed by the word “crisis.”

Is that really an accurate way to view the world? Or have all these sectors gone up-and-down over the past many decades? Does the market inevitably have cycles?

We live in a world where TV commentators report on a story one day, then in the “follow-up” tomorrow want the issue solved. It’s more entertaining that way, and today the news industry plays the ratings race perhaps more so than dramatic TV.

TV is not alone in thinking only short-term, ultimately trying to build public support for this big-government solution. Here’s my recent letter to the editor of the Wall Street Journal

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Examining the role of media in the recent $700 billion bailout provides a missing understanding of how the events transpired. Though I have long been an avid reader of The Wall Street Journal, it is apparent that this “big tent” of conservative thought has excluded other viewpoints on this risky, highly controversial handout to Wall Street.

On any issue of the day–regarding education, government regulation, corporate policies, technology, health care, military, climate change, gun rights, and many others–I have counted on WSJ for robust debate and a discovery of facts that other media missed. So it was that I visited WSJ.com’s Wall Street in Crisis section trying to understand the pros and cons of the bailout.

Story after story, blog after blog, op-ed after op-ed in this section preached only the benefits and urgency of the bailout. This perspective even seeped into front page news stories. On Monday, September 29, as more Americans than ever were reading The Wall Street Journal trying to understand what was going on, the paper referred to Lehman Brothers as a “158 year-old” financial institution whose collapse meant certain “crisis.”

“Wow, Honey, maybe this financial stuff really is serious if a bank that old is going down?” The problem is, this article said nothing about Lehman Bros. being essentially a shingle for American Express, which spun off this unit in 1994. It said nothing about the 2003 investigation into the company’s shady investment practices.

We were just supposed to think that Lehman was as legitimate a bank as say Wells Fargo, backed with solid collateral but now going under. This was simply not true. Clearly The Wall Street Journal had a dog in this fight, and the editors made sure it ended up winning.

Not only has the financial sector suffered a breakdown of legitimacy in the past weeks–so has the media, even conservative-leaning media previously thought to be trustworthy. Media junkies beware: no news outlet is, in fact, “fair and balanced.”

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The last reference is, of course, to Fox News. It’s notable that Bill O’Reilly bought the Treasury’s arguments early on, and espoused those views for the two-week public debate on the bailout.

From what I could tell, O’Reilly’s stand with President Bush convinced Sean Hannity and others to back down on their hard line against the bailout. Interesting audio clip from Bill here:

Bill O\’Reilly audio clip from The Laura Ingraham Show

So where do we go from here?

For starters, don’t buy the pointless commentary espoused on TV: “We’re concerned about what the market’s going to do tomorrow.” The markets will go up and down. It would’ve gone down if the bailout failed, and that’s natural. We’re likely looking at a worse crash in 2009 due to this bailout; watch Cato.org for the best analysis I’ve seen.

Second, it pains me that President Bush’s legacy is The Republican who Stood for Big Government. Even apart from defense spending, you cannot deny that Bush has bloated the government beyond what any true conservative would ever stand for. He may be the strongest Christian evangelical the White House has seen in a long time, but that’s no excuse for his poor economic policies.

It should be noted, though, that the state of the economy isn’t all Bush’s fault–that’s a really dumb view propagated by the far left. A lot of people are at fault.

Third, the election. I’ve noticed an editorial tilt even in the Wall Street Journal that hopes for an Obama administration. Opinion columns are showing both views, sure, but regular coverage is giving more space to pro-Obama voices. Despite the fact that WSJ has traditionally been against big government, which is exactly what Obama/Biden mandate.

Maybe The Wall Street Journal, clearly in the tank for corporate fat cats, is scared that McCain/Palin would deliver on their promise to affect the financial sector in favor of the American people (to the extent that the Executive branch can, which may be negligible). And WSJ wants nothing of it. This is just my view, though, and less fact-based the rest of the commentary presented here.

Your thoughts?

Hatchet vs. Scalpel (Recap of the First 2008 Presidential Debate)

Watch the full video now:

“Build the defense with wisdom and efficiency. We must achieve both security and solvency. In fact, the foundation of military strength is economic strength. A bankrupt America is more the Soviet goal than an America conquered on the field of battle.” – President Dwight D. Eisenhower

With this quote, the First Presidential Debate between Senators McCain and Obama began. By all appearances there was no clear winner: both stumbled at times, both got the crowd to laugh, neither seemed too bloviating or bold.

If anyone was strange, it was host Jim Lehrer who kept egging the candidates on: “Say that directly to your opponent, Senator… look into his eyes.” Creepy.

Essentially it came down to the two issues Eisenhower raised: the economy and defense.

The economy. This lead-off discussion revealed only a few differences in the two candidates, but they are major. Both expressed support for the bailout, somewhat surprising. Senator Obama said that “$700 billion is potentially a lot of money.” Yeah, potentially it is.

McCain then let loose with his views on earmarks, aka pork or wasteful government spending. He’s been called the Sheriff of the Senate, with little support in fighting “the biggest budget increases since the Great Society” (under Democrat President LBJ, 1964).

Citizens Against Government Waste catalogs the crazy spending happening currently in Congress, I encourage you to read their reports and sign up for CAGW e-mails. You should know where your money is going.

When McCain mentioned the possibility of a federal spending freeze, excepting a few categories, Obama had had enough. “You’re using a hatchet when you need a scalpel.”

Wait… the federal budget is slated to be $1 TRILLION OVER BUDGET; keep in mind that budget itself is $3.2 TRILLION. I don’t think a scalpel–used for arts, crafts and dentistry–is going to do the trick on this budget. It needs a hatchet.

Though pressed for what he would cut, Obama only brought up that he plans to bring government-funded broadband internet to rural areas. Nice use of the “scalpel” there.

Fact check: Obama said that “effectively, the U.S. has one of the lowest corporate tax rates in the world.”

False. The accounting firm KPMG analyzed global tax rates in 106 countries, finding that the U.S. is ranked one of the highest — with 40% of corporate funds going towards taxes.

Fact check: McCain said the United States is the largest exporter in the world.

False. Germany is, according to The World Factbook. The U.S. is ranked third.

Defense. To say this was heated is a gross understatement. Both sides scored points along the way, with Obama’s mention of the $600 billion spent in Iraq raising eyebrows while McCain’s stand behind General Petraeus’ strategy showed his military understanding.

Side note: it was around this point that Obama stopped referring to McCain as “John” and began calling him “Senator McCain.” McCain got off a couple zingers here, including “It’s hard to reach across the aisle from that far to the left” and “I don’t even have a seal yet” (a reference to Obama’s presidential seal which many find presumptive.)

Fact check: “Admiral Mullen suggests that Senator Obama’s plan is dangerous,” said McCain. “That’s not the case,” Obama interjected.

McCain is correct. Admiral Michael Mullen, Chairman of the Joint Chiefs of Staff, actually called Obama’s plan “very dangerous” when appearing on Fox News Sunday.

Despite the negativity surrounding Iraq, it was crystal clear that McCain has a much better grasp on foreign affairs. He talked through his 20 years of experience. He knew the current troop counts in Afghanistan from memory. And McCain forced Obama to frequently resort to “Me too” responses on several major policy questions.

Favorite quote, following McCain’s story of a young hero he remembers by wearing the soldier’s bracelet:

“Let me just make a point: I have a bracelet too.”

– Senator Obama, then glances at his wrist to remember the name