Jeff's economic update

I usually consider rhetoric of bipartisanship as chaff and an omen of bad political tidings. Well, I was not disappointed when both candidates called for bipartisan action to address the looming economic crisis and we got a government "solution" to what was portrayed as Wall Street's mess. The ink was not dry on the "new deal" before the candidates were tripping over themselves to get in front of a camera. Obama has a tirade on capitalism and the virtues of income redistribution as the fix. Meanwhile McCain thinks he is in Vegas and ups Obama's ante at every turn. Sadly predictable and orchestrated for our easy consumption. The both deserve failing grades on leadership.

For anyone interested in understanding why the billion dollar bailout won't work need only watch John Stossel's 20/20 episode last week. Economics is about freedom and free will, not economist picking winners and losers. We are in this mess precisely because of government. Namely - cheap money and easy loans. The Fed kept interest rates too low and government backed loans from Fannie and Freddie skewed markets. Owning a home became more than our exercise of our natural right to own property, but instead became a political imperative and guaranteed investment in our financial portfolio.

There is no easy fix and finger pointing from McCain and Obama is not productive. From best I can discern, Fannie & Freddie should be shut down and Wall Street's bankers should not be allowed to pawn off their bad decisions on the taxpayers. Alternatives might include allowing HUD to make low interest loans to first time home buyers of modest means to buy modest homes. (If that is deemed a worthy activity of government - which I strong doubt.) For our banking friends, a dose of the same medicine they dished out to our neighbors in South America during their banking crisis might be more appropriate. Economics 101: No free lunch.

But, then again, this is Washington, D.C., where the lobbyists buy lunch!