Power And Dollar

Did Bush Expect Congress To Solve The Recession With Him?


Bush is complaining the Congress is delaying his every effort to get us out of recession, CNN reports.


What does he expect?  He is about to go.  Who would want to send him legacy legislations?  


Everyone should be in a transition mode and see what solutions will better fit the direction the next President will want to take.  After all, there is never one solution.  So, any legislator would think “why not wait and see?”


Any real meaningful legislation will require work from both House and Senate.  Every Joe, Dick and Harry will want to add his stamp, his pet project, pet cause, pet donor’s wishes to the legislation.  And it is much better to trade favours with a new president than an out-going president.  


All possible outcomes from this congress are items that are fiscally inexpensive and good for TV items.  This mortgage crisis cheque is a good example.  Everyone gets a few hundred bucks.  It is good for re-election.  And if the problem persists to 2009 January, then there is something the legislators can trade with the new president.  


This is just a blamemanship game. 


The political solutions usually cannot do a dent in a short run.  The effects of government fiscal policies and programs usually do not affect the economy in a matter of months.  These interventions affect the market set up and their effects are measured in years and decades.


Short term interventions require government’s active participation in the market (be it real estate or stock market or whatever else).  This kind of short term interventions are effective only when the action 1) is rare and 2) is taken shiftly.


Interest rate fluctuation is the first type, however the Fed can affect only the interest rate aspect of the economy. And that is not the solution for everything.


Shiftly is a time element.  The reaction has to be quick.  Such a quick action can only be carried out by an undemocratic institution, like the Fed.  And China’s interventions are effective because they are undemocratic.  They can shut down all stock transactions to serve whatever the political purpose is.  But we live in a democracy with freedom, right?



April 29, 2008 - Posted by | banking, Barack Obama, business, Current Events, economics, election, Hillary Clinton, John McCain, Money, opinion, politics, wordpress-political-blogs

1 Comment »

  1. Still kind of sick that nobody wants to do something simply because of politics.

    Comment by Alfie | April 29, 2008 | Reply

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