Edward Harrison here.
In the last post, Marshall commented on the need for the U.S. Presidential candidates to show their mettle in a time of financial volatility. As I write this, the Dow Jones Industrial average has just finished the day up over 400 points — a relief after some heavy selling pressure the past few days. Yet, the need to find a resolution to the crisis has not receded.
I agree 100% with Marshall that our candidates need to demonstrate their bona fides on the economy because I expect little to be done before the new American President is elected and takes office.
We are in a ‘lame duck’ year right before a Presidential Election. Honestly, this market panic could not have come at a worse time because we can expect little true reform from a Bush Administration due to leave office in 4 short months. Lame duck Presidents are not known for their zeal for legislative and regulatory reform.
Moreover, Congress has shown time and again that it is incapable of taking a leadership role on critical matters of reform that require a sober-minded, bipartisan approach.
That leaves us with the U.S. presidential nominees. Neither has made forward-looking statements on how to solve the present crisis. Obama has been more clear on his approach to regulatory reform to prevent future crises, but that is not what America needs right now. When your house is burning down, you don’t need the fire department to prattle on about the need to install smoke detectors and sprinklers to prevent the next fire. You need them to stop the fire from spreading and then to extinguish it.
The likes of WaMu (WM), Morgan Stanley (MS), Wachovia (WB), and AIG (AIG) are all up strongly today. But, renewed attacks on America’s financial system are inevitable; Americans have simply lost faith in the soundness of their banking and financial system. Evidence of that comes from the meltdown of State Street in today’s trading.
Now, more than ever, the United States needs economic leadership. My hope is that the upcoming Presidential debates will give a clue as to who is truly up to the task.