My wavering vote

The details aren’t clear but it basically boils down to two options.

One, the government buys the unsellable assets from our financial institutions by way of bulk auctions. Companies will have the option of selling their bad inventory to the government at a steep discount, the lowest bidders win. The gov’t can then sell back into the market once things have recovered, minimizing taxpayer risk. This also allows the gov’t to refinance for people who are being threatened with foreclosure, thus boosting the value of the newly purchased mortgage securities. This plan seems to be the one favored by Bernanke, Paulson and some Congressional leaders. McCain has also favored this plan.

The second has been proposed by Chuck Schumer and it basically calls for a cash infusion to struggling companies in exchange for stock. Further details aren’t available.

I have a problem with Schumer’s plan. The problem is that no matter how much money we give these companies it won’t fix the problem because the problem is the unsellable assets. We can give them a blank check, but if they can’t unload these bum mortgages it won’t matter. Eventually, either the company will fold (along with our gov’t money) or the gov’t will end up going with plan one at higher cost. I think this is a bad idea.

Plan one solves the problem with the question being at what cost? Potentially over a trillion dollars, but not definite since the gov’t can minimize the risk by selling back into the market. Plus, this allows for an easier exit out of the market. And I strongly advocate for the gov’t getting out of this mess as soon as possible. Paulson and Bernanke have done well so far, with a few exceptions. First, this plan perhaps should have come sooner before we floated Bear Stearns ($30 billion), Fan/Fred ($200 billion) and AIG ($85 billion). If they had come up with a purchase plan sooner, these bailouts may not have been necessary and the cost could have been avoided. But this is hindsight and probably unfair. At any rate, what we did for Bear Stearns and AIG is basically what Schumer wants to continue doing. It won’t work.

Also, the Fed needs to clarify their bailout rules. Wall Street got mixed messages. We helped Bear, AIG but let Lehman fail. There was no clear rhyme or reason and uncertainty is a bad thing in the market.

I read two speeches from our presidential candidates. First, McCain was impressive. After some initial waffling, he has become very assertive in the past 48 hours as the crisis grew. He now has a clear, strong plan for what he intends to do as President and what should be done short-term to help the market. It is the most impressive McCain has looked since I’ve been following politics. Obama was a stark contrast. He called for swift action after explaining what the problem is. But there were no specifics, only suggestions of what a plan should look like. Oddly enough, those suggestions were specifically addressed by McCain. Half of Obama’s speech was dedicated to assigning blame, even after he called for bipartisan action. He then said he will soon release details on his plan. Basically, he said the same thing Reid said and seemed to have no idea how to respond to this mess we're in. It was very disappointing and further reinforces my notion that this man is NOT ready for the office.

I urge my readers to look at both speeches. I've linked to them. It doesn't matter if your mind is made up or what your party affiliation is, you need to see how the two candidates handle a crisis. My vote was once solid for McCain, then up for grabs as our economy came under threat. Today, it is once again solid and the response these two men showed is what solidified it. There is no better judge of a future leader than to see how he responds to turmoil.

Bush so far has done well. He was actually criticized by Congress for not talking to the American people. In all honesty, when a crisis hits, I need to President to act and not give me a comforting hug. And Bush was acting, along with Paulson and Bernanke. Today he said there will be ample opportunity to assign blame, but action is what is needed right now. Good for him! Bush has stepped up. Yes, he holds his share of the blame and I’m sure he knows that more than anyone, but again he didn’t waffle in the face of a crisis, he took action. It was the most assertive I’ve seen him since 9/11, at a time when Congress was saying “no one knows what to do” and basically saying “we need to get the heck outta here!”

Bush stepped up as a leader, with Paulson and Bernanke as his go-to guys, and although McCain worried me at first he has now come around and is looking very Presidential. Meanwhile, Obama tells us he will have a plan real soon. Wow!

This is not my bias talking. I assure you, if the situation were reversed with Bush and McCain flaking and Obama looking assertive he would have won my vote. Period.