The economy for many American’s is the number one issue this political season, as indicated by polls in a previous blog post of mine. The unemployment rate is at a five year high of 6.1%. There is a mortgage crisis that is resulting in large companies and banks going belly up. Gas prices, although having dropped recently, are very high and many people have changed their ways because of it. Right now the two candidates are polar opposites on the issue of where the economy stands now.
Senator Barack Obama recently made the comment that we are currently in the worst economic crisis since the Great Depression. Comparing the great depression to the crisis now is the same as comparing apples to oranges, and negates the drop in the fall of 1987, which in terms of percentage was much worse. In an interview on the Fox Business Network Amity Schlaes compared the depression to now. She brings up that the depression grew because the tax rates were increased from about 25% up to 30%. Raising taxes is what Obama plans on doing. Amity also brings up that she believes the depression could have ended earlier than it did, but there was too much regulation by the government because of the New Deal. The Obama camp is criticizing McCain and the republicans for a lack of regulation. So, inversely, this would mean the Obama camp wants more regulation and in the above interview it is even stated that we need more regulation.
Senator John McCain has stated many times that he believes even though we are in tough times that the fundamentals of our economy are still strong. Neil Cavuto points out why the economy is still strong and that it is the housing market that is weak, not the overall economy. Cavuto points out that consumers are buying much more than analysts expected. The housing market is collapsing because in the nineties the federal government pushed for banks to give loans so people could buy homes. The problem is that these loans should not have been given out to many of the people that these loans were given to because they were not financially stable enough to be able to pay back the loans to the banks. When the loan is defaulted on the bank takes the home, which has been driving down property values for other homeowners. Neil points out that the banks took a huge gamble on the housing market with these loans and have lost. Neil believes the economy is strong and it is not time to run and hide as the Obama camp may like us to believe. The price of oil has also dropped significantly.
“Oil is down more than 30% since hitting a high of $147.27 on July 11.” Oil is now below $100 a barrel. This occurred because of the basic economic idea of supply and demand. Over the summer many people used alternative forms of transportation such as riding a bike, walking, or using public transportation. Because of the cutback on consumption of fuel this past summer the overall supply ratio has gone up since demand was down and that is why we are seeing oil go below $100 a barrel. This drop in gas prices in the coming months will finally provide some relief from high gas prices which will trickle down to lower the food prices.
People are short on cash as it is, yet Obama wants to initiate a “progressive tax” increase. Obama seems to think that he can pull from only one side of the bucket by taxing only the rich. This crisis is not the end of days; we are not in a modern day Great Depression. In fact, the economy is stable according to the Federal Reserve which just sent across the wire that interest rates will remain unchanged, had the economy been in trouble the interest rates would have risen. As Neil Cavuto pointed out “we’ll be fine.”