At the height of the early stages of the bank failures when Lehman Brothers and AIG went to the wall, I was amused by McCain’s attempt to buy time from coming up with a recovery strategy by hiding behind the government’s skirts. But I was even more bemused by Obama’s failure to come up with any economic recovery plan of his own. I thought there was a clear window of opportunity for someone to come up with aspirational recovery plan that would have resonated with “main street” while the rescue of Wall Street was being chewed over by all those fearful of the future of their big pay days.
I came away with the feeling that Obama wasn’t entirely bristling with ideas about how to handle the current crisis or the economy in general. He is very good at articulating the policy he has adopted. And he comes across very well and extremely media friendly when he makes his speeches. However, I always get the feeling there is just the ever so slight feeling that while he is very much almost pyrotechnically switched on; at times there might not be anyone in residence.
I was somewhat relieved to hear his benefits and tax break package. But I felt it took him a bit too long to outline it. He is lucky that McCain is still battling with adding up the huge numbers involved. He did always love a good war so I guess he's in the fight of his life now. His abacus must be smoking!
I really felt the recovery focus on banks is the kind of limited thinking that comes with a slavish devotion to capitalism and free market principles. It's as if the banks can stimulate spending and saving amongst the general populace. Let’s not forget that if the banks had the solution they wouldn't have gotten us into the mess in the first place. They started the reckless lending and then tried to recover by throwing their customers to the wolves by wholesale repossessing homes. That’s the banks idea of a solution. Overkill and customer exploitation.
A solution could have been to protect small and medium sized business, and then provide mortgage and credit relief to low income earners. There have been a lot of profitable and stable businesses that have been strangled by the withdrawal of credit facilities. Some of these would have continued to serve a much available market and make a sensible profit if the financing conditions had remained stable. The banks have withdrawn support to these businesses and watched them grind to a halt.
Given the amount of money that the government invested in the anti terror panic and now in shoring up the wobbly banks, it could have done more to help small businesses. Maybe set up a unit of business advisors to review the circumstances of those businesses struggling for credit lines. They could have checked which of them were viable and would be able to stay so after restoration of credit facilities and then make the banks offer them credit. After all, a huge some of public money is going into banks. They can hardly say no. Those businesses that were ideas that have turned out not to have solid market standing would just have to go to the wall. Self indulgence can’t be supported in these stringent times.
The government could have, and hopefully still might halt all repossessions of the homes of people who are in employment, or likely to return imminently to employment. The banks could either refinance them or give them a payment relief period while they attended debt management workshops. There would be very structured conditions for them receiving the relief. Any who refused to comply or defaulted would have to face the consequences of the economic downturn.
There are still a huge number hurdles to scale. I don't know whether the other side of this crisis is going to be a pleasant sight. It would be nice to have politicians who understood both the economy and the people that are its life blood. Not just the big financial
