Senator Obama speaks as financials fail

Today the economy is the big issue in the Presidential race. That’s not to say that the Presidential candidates weren’t paying attention to that before, it’s just that they are panicking to look strong now.

"The Fed has been providing banks extra money to ensure their solvency, but not requiring that loan reserves be increased. It's kind of like stopping a leak in your tub by adding more water. The problem is not getting fixed and may get far worse. And all the panic about the mortgage industry seems to have done nothing but whip up polispeak from political candidates and political parties, each looking to sway voters." - July 2008

Recently Senator Obama has been attacking Senator McCain about his positions on the economy, specifically that McCain stated the economy was ok. Senator Obama now states that he will reform regulation. He still maintains his desire to increase taxes for an undeclared amount of those Americans NOT receiving a paycheck but making them.

Well isn’t that nice. It’s very emotional polispeak, but it’s not worth much.

First consider that the real problem in the economy was created during a Democratic Presidency. The Clinton Presidency. The problems today are just the continuation of the internet bubble, which President Clinton allowed to happen. President Bush failed to resolve the issues, true, but the Twin Tower attacks altered the viewpoint.

In trying to cushion the pain of the internet bubble bursting, both Administrations, created the real estate bubble. Like all bubbles it too burst, but because most companies had not fully recovered from the first crash they took further damage now – especially in the financial markets.

"Just remember this, no matter what plan is announced oil is still nearly at all-time high levels, many mortgages are still failing and/or at risk of failing - and not all of them are sub-prime. Food prices are increasing as ethanol production is diverting corn and wheat to this less efficient alternative fuel source and with recent laws mandating increased usage on a national level we can expect even higher prices. The financial sector is not done writing-off their losses for making the bad loans, and more money will be coming from overseas to prop them up." - January 2008

Every time the Government steps in to bailout the stock markets, the worse they make the situation. Bailing out homeowners that made stupid purchases, without consideration of the potential consequences, hurts the economy. Regulation does not prevent dumb decisions, but politicians would like you to think so.

Banks fail every year, as to hundreds if not thousands of businesses and home loans. That in a good economy as well as bad. But this looks worse so people are more scared now than then.

But Senator Obama is essentially promising to go to the companies that are hurt and increase their taxes. He wants to add to the burden they have now. And that is supposed to employ more Americans, and provide more money to them. Add to that the fact he wants to put more people into the process.

Adding regulation means more people involved. These people work for an employer that cannot balance its books, and cannot efficiently manage any aspect of what it does. And has done so for decades. Were the Government a business it would have been bankrupt before I made it out of elementary school. And Obama wants to add to that.

"I would also remind people that the markets may soon be hit. If the minimum wage is increased, lay-offs and slower hiring will ensue. Unemployment will go up. Why? It's economics that should be apparent from high school classes; small businesses can't afford the increase. Yes those living on minimum wages will have more money, there will just be fewer of them for a while. Net result in my opinion is that unemployment will increase, as will welfare, and the economy will slow as fewer people will be spending the extra cash. That is no gain for many, at least for 3 years after the increase. Oh, did I leave out that there will be fewer small businesses, some closed due to the increase and others unable to start because the increase creates a ceiling of minimum cost that they can't cross." - November 2006

That is not to say that some don’t laws need to be changed. But America is not falling apart, like some would want you to believe. 90% of mortgages are being paid. Most businesses are running normally. 95% of workers are getting paid just like they did last week, or a year ago.

Right now the Dow Jones is down (2:30pm). That’s because the Fed failed to lower interest rates. Because the Government failed to interfere with the markets, as it consistently has, as expected investors are upset. Such is life in an industry that ebbs and flows on a minute by minute basis everyday.

But if the Government bailed out the banks, and lowered interest rates, and bailed out homeowners, would that be better?

If Senator Obama had his way, all the above would happen. And taxes for corporations, investors, and the AVERAGE American would all go higher. So how would that help anything? More people would be mucking up the markets, the debt would go higher, and you would have less money to pay your bills with.

"Add all that up and you have a stagnating market, with reduced sales, higher costs, shrinking profit margins, higher taxes, horrible bond rates, and depressed real estate values. I call that a real problem. Especially if the tight credit, higher fuel costs, and higher taxes cause more home mortgages to fail than just the 15% low-end estimate I posed earlier." - November 2007

Seriously people, listen to more than the well-time polispeak. View everything in the context it is presented in. Remember everything that the candidates have said in the past. The economy is not great, but it’s not the Depression either.