A quote for the next administration

"You never want a serious crisis to go to waste. This crisis provides the opportunity for us to do things that you could not do before."

Rahm Emmanuel supposedly said this though I have yet to find it in a primary source. I have been accused of downplaying the scope of the current economic situation. I do think it very serious. People are losing their jobs, credit appears seized up, businesses are in trouble. To combat deflation the Fed is dropping so much money on the economy that I fear we will have serious inflation next year.

I do believe however, that many people have an incentive to talk up the problem and make it seem worse. If you are an auto executive at the Big 3 or CEO of a bank or investment house, it helps to claim that it is all not your fault, that larger macroeconomic factors are to blame.

If you believe that government is the solution to problems, it makes sense to talk up a crisis.

If you are the press, crisis is more exciting and sells more newspapers than covering a city council committee hearing on street names.

So while I do not down play the extent of the current situation, I merely note that many of those running around screaming THE SKY IS FALLING are also those who stand to benefit from when Congress passes the Sky Stabilization Stimulus Package of 2009.

Credit Crunch Part II!

First my wife, now me. I received an offer today for a home equity loan, despite the fact that I rent (though my old home in Chicago is rented out).

So, where is that credit crunch again (and yes Rodak, I know that is how they make their money, but we keep hearing about how the debt markets have seized up).

Credit Crunch!

If there is such a horrible credit crunch, why did Bank of America send my wife an offer of a $50,000 unsecured loan?

McCain suspends his race

Everyone is talking about Senator McCain's decision to suspend his campaign and head to Washington for the bailout. He has asked that Friday's first debate be postponed. At this time, it seems unclear whether Senator Obama will agree.

My reaction is that this will surprise those who know me -- I see this as Senator McCain essentially conceding the election. Two weeks ago, when Senator McCain was rising in the polls, I warned that something could happen to reverse the situation. In particular, I warned that the credit crunch could get worse. It has.

As I listen now to President Bush speak, I believe that the rescue plan will be unpopular. Some will see it as a bailout of big business, others as too little too late, and in any event, the GOP will be tagged with allowing it to get to this point (and while I think there is lots of blame to go around, Bush could have done things administratively to slow down Fannie and Freddie and the whole market).

I am a fervent McCain supporter. I believe that he has was the best person in 2000 and is the best person now. But the election is no longer about Iraq or foreign policy, it is now about the economy and this will hurt McCain. (as an aside, for saying this, I have been accused of Astroturfing). I wish that were so.

I hate to say it and I hope I am wrong, but McCain just conceded the election, in an honorable way.

[Edited to add -- Senators McCain and Obama just released a joint statement on the bailout]