Friday, September 26, 2008

McCain / Obama - round 1

I know their differences on war policy. I wanted hear their differences on monetary policy.

I didn't hear any differences. And since they both advocated balanced budgets, I appreciated Jim Lehrer pressing for the cuts they would make to offset the bailout of those living high on the hog. Unfortunately, there was no Ron Paul straight talk - cut the IRS, the Department of Education, the Department of Energy, etc. Agree with him or not, at least he says what he'll cut.

Generally, as I expected Obama was a better speaker. And I preferred his repeated comments about agreeing with Senator McCain... over McCain's repeated comments about how Senator Obama didn't understand. But on one close-to-substantive comment, Senator Obama said that the bailout would require the federal budget be trimmed with "a scalpel, not a hatchet."

I disagree.

If we're shelling out $700 billion and the annual federal budget is $3 trillion, then I think we need a hatchet... or maybe an axe.

I saw Charlie Gibson tonight. He was reassuring the public that the $700 billion is a loan that will be repaid. And he has a point, but is it absolutely true? I'm not sure.

Consider the BP gas station. It may currently be valued at $1 million. But what if remediation costs $3 million? Is the property worthless? Or perhaps it's a liability of $2 million? No one knows. And while I doubt that "environmental hazards" or similar impairments would be particularly widespread, I have no clear knowledge of the extent of that situation. Nor does the US Senate Banking Committee... I emailed them last night and they acknowledged that there is no way of knowing that at this point.

And then there's Bernanke's comments about today's "fire-sale" prices being far less than the "hold-to-maturity" prices. Interesting analysis by Helicopter Ben. But what if his "time-of-maturity" is ten years from now? Twenty years from now? Shall I just continue paying the interest expense to China for all those years?

So why are we doing it?

Because for the most part, our elected officials have no idea of what's happening. And they'd rather "do something" than "do nothing." So they listen to a gazillionaire and former Goldman Sachs CEO, Hank Paulson, and his Wall Street buddies.

Tim White


Anonymous said...

I thouhgt it was telling that when Lehrer asked the candidates what they would cut to pay off the financial baiolout Obama rattled off a laundry list of programs he will increase spending for

tim white said...

I forgot about that. He did speak to all the programs that will require increased spending. I think that was when he made the scalpel / hatchet comment about his energy program.

Anonymous said...

We have to make choices. If we want to deal with the financial mess and the energy mess, we are simply going to have to forego all the "nice to have" programs that we have gone without the last 200 plus years.

I think one place to start is "affordable housing". When real estate prices are plummetting how does it make any sense to subsidize new construction of residential developments?