|Economy to play big part in election|
|Written by Matthew Tomlin, Daily Vidette Staff Writer|
|Monday, 22 September 2008 18:00|
With the recent news last week from Wall Street, there is no doubt that the economy is going to be a major factor in this year's election.
"I think it's starting to become a more prominent factor in terms of the election. Each candidate is not only going to have to address the most recent mortgage situation, but the long term aspect as well," James Payne, economics department chairperson, said. "I think a lot of people are concerned about it."
The Dow Jones fell over 500 points last Monday, marking the largest one day drop since the market reopened after Sept. 11, 2001. Around $700 billion was lost in retirement plans, government pension funds and investment portfolios.
Much of the panic was attributed to Lehman Brothers, a major investment bank that survived the Great Depression, filing bankruptcy. Another investment bank, Merrill Lynch, was saved by Bank of America.
"Right now the situation is such that we are running huge budget deficits. Who knows what's going to happen with crude oil," Payne said.
The stock market fell again Wednesday, nearly 450 points, following an emergency $85 billion loan from the Federal Reserve to save one of the world's biggest insurers, American International Group, Inc, from going under.
"You'll probably hear two sorts of themes coming out of this mess," Neil Skaggs, professor of economics, said. "One will be that the Bush Administration was asleep at the wheel, and wasn't regulating the financial markets as they should have been regulated."
"The second theme is that the government, for a long time, has been promoting a lot of the features of the financial system that became a problem," he said.
The Dow rallied nearly 780 points Thursday and Friday amidst talk of a major government-sponsored bailout. The Bush Administration has since announced its plans for a $700 billion bailout, which both presidential candidates have been cautious to respond to.
Payne expressed his concern about the economic policies of the presidential candidates, saying they will "add more to the deficit."
"A bad economy is usually bad for incumbents," Skaggs said. "Probably, there will be a lot of play about this being a Bush Administration problem. I don't think it can be good for McCain."
The candidates have exchanged volleys back and forth throughout the week, while at the same time urging an end to partisan rancor in trying to solve the crisis.