Bush: Don't Panic! At Least Not This Week, Anyway
From President George W. Bush's speech today about the economy:
Over the past few days, we have witnessed a startling drop in the stock market -- much of it driven by uncertainty and fear…. This uncertainty has led to anxiety among our people. And that is understandable -- that anxiety can feed anxiety
Gee, I wonder why Americans are feeling anxious just a couple of weeks after THE PRESIDENT OF THE UNITED STATES TOLD THEM WE'RE HEADING FOR "A LONG AND PAINFUL RECESSION"????
More from Bush:
[T]he decline in the housing market has left many Americans struggling to meet their mortgages and are concerned about losing their homes. My administration has launched two initiatives to help responsible borrowers keep their homes. One is called HOPE NOW, and it brings together homeowners and lenders and mortgage servicers, and others to find ways to prevent foreclosure. The other initiative is aimed at making it easier for responsible homeowners to refinance into affordable mortgages insured by the Federal Housing Administration. So far, these programs have helped more than 2 million Americans stay in their home. And the point is this: If you are struggling to meet your mortgage, there are ways that you can get help.
Why does HOPE NOW leave me feeling so HOPELESS? Why is a chunk of my personal income going to bail out people who chose to refinance–not buy an initial mortgage necessarily, but leverage it into an even bigger ATM machine–at the top of an insane housing market? When do I finally get rewarded (through the market correction of prices), not punished (through taxation to artificially prop up those prices), for choosing to rent rather than buy into a bubble?
With these actions to help to prevent foreclosures, we're addressing a key problem in the housing market: The supply of homes now exceeds demand. And as a result, home values have declined. Once supply and demand balance out, our housing market will be able to recover -- and that will help our broader economy begin to grow.
Note this explicit justification for government action. It's now an urgent federal priority to make sure asset prices appreciate forever. Even though housing prices in real terms, even after a two-year plunge, are still up 40 percent since the beginning of 1997.
[W]e're working closely with partners around the world to ensure that our actions are coordinated and effective. Tomorrow, I'll meet with the finance ministers from our partners in the G7 and the heads of the International Monetary Fund and World Bank. Secretary Paulson will also meet with finance ministers from the world's 20 leading economies. Through these efforts, the world is sending an unmistakable signal: We're in this together, and we'll come through this together. […]
And as we act, we will do it in a way that is effective. […]
The plan we are executing is aggressive. It is the right plan. It will take time to have its full impact. It is flexible enough to adapt as the situation changes. And it is big enough to work.
A score of central governments working in concert to coordinate industrial policy on a perhaps-unprecedented scale? What ever could go wrong!
Exasperated sarcasm aside, I have two questions for the assembled:
1) Is this indeed The End of American Capitalism as we know it?
2) Am I the only tightwad in the world who has always thought it a way-too-risky idea to put any more than, say, 10 percent of your savings into equities markets? Seriously, I'm starting to feel like a jerk here, but when did "retirement" come to = "massive over-exposure into stock-index funds"?
David Zucker, back when he was still funny, predicted Bush's calming ways three decades ago:
