Saturday, October 11, 2008

On Friday morning I watched George Bush tell the American people to not act in fear with the stock market to quote directly from his speech,

“Good morning. Over the past few days, we have witnessed a startling drop in the stock market -- much of it driven by uncertainty and fear. This has been a deeply unsettling period for the American people. Many of our citizens have serious concerns about their retirement accounts, their investments, and their economic well-being”

And while I agree that much of the recent downturn of the global stock market is a result of fear I must ask how that fear was perpetuated? Could it be George Bush himself? Let’s not forget his statements urging America to support the economic package his team created to help with the liquidity crisis? Again his own words speak volumes.
U.S. President George W. Bush, saying "our entire economy is in danger," urged Congress to approve his administration's $700 billion bailout proposal.
"We're in the midst of a serious financial crisis, and the federal government is responding with decisive actions," Bush said in a televised address Wednesday night from the White House.
Bush pointed out that the collapse of several major lenders was rooted in the subprime mortgage market that thrived over the past decade.
He said passage of the $700 billion bailout proposal was needed to restore confidence in the market.
"I'm a strong believer in free enterprise, so my natural instinct is to oppose government intervention," he said. But "these are not normal circumstances. The market is not functioning properly. There has been a widespread loss of confidence. From CNN
The heart of Bush’s speech on the 25th, it seems was to scare people into supporting his plan. Ultimately people supported it, but the fear Bush pushed has continued to prevail and the economy is paying the price. I’m sorry but you can’t have it both ways Mr. President. You can’t scare people to support your policy and then 15 days later tell them fear is the reason for the stock market problems.
Had Bush described with logic and intelligence why the economic bailout was beneficial to every American (not just as many perceived Wall Street investment banks) perhaps the stock market would have been more stable. Instead of scaring people into supporting policy, educate people on policy and get the same result. In the end Bush has reaped exactly what he sowed on September 25th, a large set of investors scared about the economy. Had he acted as a leader he would have had a bailout package and people who felt confident that the economy would turn around.
To be honest I fully supported the package put together. Was it/is it perfect? No, but it addressed the critical issues allowing banks to have confidence to loan money. This is a good thing as it gets houses built, loans for buying houses, improvements to business done in a timely fashion. The plan was not the problem, how it was marketed was the problem and we now are dealing with that poor marketing with the stock market everyday.

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