For the past year, I have been bombarded with a steady stream of dire news and various statistics showing worst declines in decades. Bear Stearns and IndyMac have fallen and several huge financial institutions seem to be teetering, yet Bloomberg reports that neither of the political parties are addressing the current financial crises:
The U.S. is facing the worst financial crisis since the Depression. You would never know that from the Democrats’ platform in Denver or its Republican counterpart, or from listening to Barack Obama or John McCain.
While both candidates have bemoaned the ravages of the subprime crisis, they have yet to spell out steps for tackling it, such as using taxpayer money to shore up banks and housing.
“They fail to come to grips with the biggest danger that is going to hit the next president in his first few months in office: the crisis in the capital markets,” said David Smick, a Washington-based consultant to hedge funds and author of “The World is Curved: Hidden Dangers to the Global Economy.”
The Democrats’ platform, adopted at their Denver convention this week, labels the crisis a “debacle” and promises to jump-start the economy with a $50 billion stimulus package. It says nothing about helping banks or bailing out the mortgage-finance firms Fannie Mae and Freddie Mac.
The draft of the Republicans’ plank, to be adopted next week at their convention in St. Paul, Minnesota, supports “timely and carefully targeted aid to those hurt by the housing crisis” and opposes bailouts of private financial institutions. It doesn’t mention Fannie and Freddie.
The lack of attention to what has happened in the financial world in the past year most likely shows that this is not a winning political issue or that lots of people don’t really know what’s going on in the first place. I think this lack of attention is a serious mistake. Refusing to address and publicize the problems that gave rise to the crises decreases the likelihood that these problems will be solved in the future.
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