Five Days After Bailout, Economy and McCain Are Tanking

By Jeralyn, Section Elections 2008
Posted on Tue Oct 07, 2008 at 06:37:47 PM EST
Tags: John McCain, Barack Obama, Sarah Palin (all tags)

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Last week on the day the Dow had its astounding 770 point loss, I asked how much can you afford to lose? I mentioned:

I don't have any investments, but my mother has a modest amount that is used to pay for her nursing home care. ... Today, she lost thousands.

Friday, the bailout agreement agreement passed and things have gotten worse. Yesterday and today she lost thousands more. All in so-called "large cap" (less-risky) stocks that supposedly always come back. I hope she lives that long.

I don't know many people who can lose such huge sums in a week and keep on trucking. Here's what I think it means for the election. [More...]

We need a change. We need new leadership. It would be laughable that John McCain thinks he can win the election by avoiding the economy and instead having Sarah Palin talk about William Ayers -- if it weren't so serious and the stakes not so high.

Americans aren't stupid. They know McCain represents four more years of the failed policies of Republicans and George W. Bush -- and that Sarah Palin is no more qualified or prepared to be Vice President than they are.

I am ready to predict a landslide win for Obama on November 4. It's all in the turnout and given this economy -- and the fear that the prospect of Sarah Palin being so close to the Presidency generates in millions of Americans -- it will be unprecedented.

McCain likely will lose in Florida, Pennsylvania, Ohio and Michigan. He may not even take some really red states like Indiana. The presidency has become far beyond his reach.

Voters may not know Obama that well, but they know McCain and that he's not the one to lead. Coupled with his sleazy Hail Mary pass of putting Palin on ticket, he's demonstrated unequivocally that he can't be trusted to put our interests above his own.

Voters will take a chance on Obama. They want change. The worse things get economically, the more change they'll want. The "O-ba-ma" crowd will drown the "USA, USA" team and McCain-Palin will go down in flames of historic proportion.

If Osama bin Laden was captured or killed between now and November 4, it would be too late to help John McCain. If he tried to take credit, he'd be a laughing stock -- it would be as phony as his claim he was suspending his campaign because Washington needed him to help with the bailout bill.

McCain wants to cut medicare and medicaid benefits, tax health care benefits and privatize social security. There are millions and millions of Americans (like my mother and and people my age whose parents desperately need those benefits) who won't stand for it.

Wishful thinking? Perhaps -- so just in the race tightens up, don't forget to vote. I've finally concluded there are way more of us than there are of them. But it really is all in the turnout.

< Tom Brokaw's Questions | A "Dear John" Letter to John McCain >

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Five Days After Bailout, Economy and McCain Are Tanking | 14 comments (14 topical)

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Obama '08 (5.00 / 1) (#1)
by robrecht on Tue Oct 07, 2008 at 07:02:37 PM EST

I wish I was just starting out again after college--good time to start pouring money into a 401k with a very long time horizon.

But, instead we're looking at retirement in not so many years, not to mention college for two kids before that.

Only good thing about this economic downturn, is you don't hear so much Republican talk about privatizing Social Security.

A nuclear exchange ... (5.00 / 1) (#3)
by Robot Porter on Tue Oct 07, 2008 at 07:05:25 PM EST

between India and Pakistan might, I repeat might, swing the election back toward McCain.

It would need to be a FP event of that magnitude to get people to stop thinking about the economy.

Bad argument.. (none / 0) (#2)
by apolitical on Tue Oct 07, 2008 at 07:03:30 PM EST

Long time lurker here. Felt the need to post today.

I have seen you now twice use the state of your mother's financials as an argument for change.

I find it very difficult to support this line of reasoning. If your mother is close to retirement or has retired, her money SHOULD NOT be in the stock market. If it were, it was a wrong decision on her part or whoever manages her finances. Why should those of us who invested responsibly suffer for your mom's actions? Stock market is high risk and high return and your mother and everyone else who lost money should know this.

What happened to our economy was almost inevitable (given the prevalent and unfixable human greed) and if you really think a Democrat would have made a difference, you are making at best a naive argument (I am ridiculing your argument and not you)

If you think more regulation is the way to go, then you should brace yourself for an even slower growth than the 2-3% that our economy sometimes manages.

The basic fact remains we are in a global economy and because of lack of innovation have become uncompetitive. China and India have caught on and will surpass us. Thinking otherwise is merely wishful. (remember they have 10x our population combined.. why shouldn't they be bigger and better. Our race/nation is not fundamentally superior)

Those of us who are smart and enterprising will go out and find opportunities in these growing nations. Others will continue whining about our lost glory and blame it on politicians.

I am a democrat to the core (and I champion progressive ideas). I hate the retrogressive economic arguments that some democrats like to make all the time though.

Excuse me (5.00 / 1) (#6)
by standingup on Tue Oct 07, 2008 at 07:23:45 PM EST

but you don't have enough information to make the assertion that Jeralyn's mother should not have been invested in the stock market and even worse suggest that it somehow hurt you or anyone else?

You have no way of knowing what percentage of her money she has invested in equities or even what type of equities she has invested in either. As a general rule, people who are retired have less tolerance for risk but that does not mean they can't have a portion of their money in equities that does not leave them overexposed to market fluctuations.

As I said before.. (none / 0) (#8)
by apolitical on Tue Oct 07, 2008 at 07:36:30 PM EST

she has every right to put her money in the stock market. She should have also known if she were invested in the stock market, there's a huge possibility of a downside. Why should Jeralyn use that as an argument here is what I am objecting to.

And how is it hurting me?

The general panic because of stock market fall has resulted in all these laughable policies being rolled out by the fed (which eventually involves your and my tax dollars). Today we are bailing out the commercial paper market. what next? tomorrow we'll bail out small businesses? how far will this madness go?


: No (none / 0) (#12)
by standingup on Tue Oct 07, 2008 at 09:27:07 PM EST

you said:

If your mother is close to retirement or has retired, her money SHOULD NOT be in the stock market. If it were, it was a wrong decision on her part or whoever manages her finances.

You are wrong. Each person has different circumstances that determine how they should be invested. Those will differ for everyone depending on how much of the money they need to have available at different periods. A person should be diversified to meet their needs and that can include stocks. The interest rates have been so low for some time that safer fixed income have barely kept up with inflation. This has put an additional strain on people at or near retirement.
If you don't have the stomach for market crashes, corrections and volatility, perhaps you should rethink what you believe to be responsible investing. No investment in common stocks is risk free or not subject to fluctuations. This is not the first time the stock market has had a reaction to a crisis like this and unfortunately it probably will not be the last. But it is not as simple as people panicking causing the government to pass legislation to prop up the stock market.
There is an entire shadow banking system underlying this, unregulated and hidden from most of us. And deregulation, specifically written by Republicans, is responsible for the loophole that allowed much of the excessive speculation that has created this mess. Once the market saw the emperor had no clothes, the natural progression was a correction and possibly a little over reaction. Once the market feels confident the excess inflation and exposure has been settled, money will start flowing back into it.
And regulation is not a bad thing. Proper regulation, including enforcement, is necessary to provide confidence in our markets and economy. Basic rules that promote truthful, transparent financial reporting and market transactions help protect us from the fraud and manipulation that has hit us again. We are paying the price now for the loosening of those rules.

The plan was not about the stock market (none / 0) (#4)
by Manuel on Tue Oct 07, 2008 at 07:05:29 PM EST

Since the plan won't go into effect for another few weeks, it is still too early to judge its effectiveness. Yes, fear that the plan won't work was part of the drop today but the big factor was the realization that the downturn will be longer and deeper than expected. I hope I am wrong but this may not be the market bottom although we may get a pop from a rate cut.

And yes, McCain should not be allowed anywhere near the economy.

Oh, c'mon ... (5.00 / 2) (#5)
by Robot Porter on Tue Oct 07, 2008 at 07:14:59 PM EST

one of the key arguments for doing it so fast was to inspire confidence in the markets.

It hasn't done that.


It was the credit markets (5.00 / 1) (#7)
by standingup on Tue Oct 07, 2008 at 07:31:52 PM EST

not the stock market.


Nonsense! (5.00 / 1) (#9)
by Robot Porter on Tue Oct 07, 2008 at 07:40:39 PM EST

Countless people in congress pointed to the drop in the Stock Market after the first bailout bill failed, as a sign as to why it was necessary to do the bailout now.

It was a key part of the argument. And it was before this as well.

Pretending it wasn't is just ridiculous.


: What the politicians spouted (5.00 / 2) (#10)
by gyrfalcon on Tue Oct 07, 2008 at 08:10:56 PM EST

did not and does not reflect what the plan was intended to do. Yes, there was some hope that once the bill was passed and signed, the stock market would rally a bit, but that got overwhelmed by other factors.
Treasury won't be able to even start actually implementing their plan for another couple of weeks at best. In the meantime, grit your teeth. The credit markets are still frozen tight and will remain so until the Treasury team is able to start acting.
But the best possible impact on the stock market will only be that it doesn't go down even further than it otherwise would.
The bail-out was not directed at the stock market at all.

The stock market will do (5.00 / 1) (#14)
by Manuel on Wed Oct 08, 2008 at 12:35:09 AM EST

what it will do. The primary problem is that the credit markets are frozen. The stock market is signaling lack of confidence that the plan will work but there is no real evidence yet that it won't as it hasn't been implemented. The stock market is also anticipating a severe recession. The stock markets are in a panic right now. If the credit market situation improves, the stock market will follow. If not ...


Democrats are as responsible as the Republicans (none / 0) (#13)
by Andreas on Tue Oct 07, 2008 at 10:42:26 PM EST

Both parties are representing Wall Street and both have supported the transfer of wealth to Wall Street (the "bailout").

Yes, change is needed. The current developments are an argument against both major parties. Both parties need to be removed from power.

Free Market My Arse.... (none / 0) (#16)
by kdog on Wed Oct 08, 2008 at 09:48:24 AM EST

I heard in passing last night that the government is gonna loan money directly to GE and GM...but small businesses are still on their own trying to obtain necessary credit from the banks are getting government handouts.

The rigged market in action folks...the little guy has no chance with the decked totally stacked against them like this. I guess the trick is to make your company so big, bueracratic, wasteful, with mad lobbyists on the payroll...then the man will help you out.