Fed Chairman Ben Bernanke isn’t the kinda guy to yell “fire” in a crowded theater, except when the economic house is in real danger of burning down. At least that’s what one market expert explained as I watched the late-night news. Frankly, I don’t know what the hell to think anymore about what is going on in Washington, D.C., as the daily news cycle brings one stunning announcement after another – Warren Buffet buying $5 billion worth of Goldman Sachs; John McCain suspending his campaign; President Bush holding a news conference to tell us how we got into a meltdown of the financial markets in the first place.
What does it all mean? How will it help or hurt my family?
The only thing I do understand right now is that the taxpayers are going to be stuck with $1 trillion worth of debt. Wall Street is scared. Main Street is furious. And the world is watching.
Earlier this week, I was in San Francisco participating in a “salon” hosted by Peter Thiele, the founder of PayPal and a member of Facebook’s Board of Directors. There were 20 CEOs and VC guys (and gals) in attendance to hear from some of us political folks about, well, whatever we wanted, which of course turned out to be politics. (We are very geeky like that.)
However, I was much more interested in hearing from the money people, because I am the first to admit I don’t know a P/E ratio from my son’s P.E. schedule.
Here’s what I took away: The really, really rich movers and shakers are completely convinced that neither Sen. Obama nor Sen. McCain have a clue about the economy, or how to fix the plague of fiscal problems descending on America. The advisers with whom they are surrounded are shallow and have very little to add to the discussion.
I can’t say I really disagree with this notion.
What I do know is that good old economic conservative principles that have always worked in the past will work now, if given the chance. Free markets. Less regulation. Consistent oversight. Growth. As for ordinary folks, don’t buy more mortgage than you can afford, and live below your means.
Texas Rep. John Culberson is proposing a two- year moratorium on capital gains taxes, according to his website. His ideas on this appear thoughtful and true to capitalistic form.
“I also support a two-year suspension of the capital gains tax, reforming the more burdensome provisions of Sarbanes-Oxley, and passing a comprehensive energy plan that will make America energy independent,” Culberson said in a prepared statement at his official website. “These steps will encourage capital formation and won’t expose the American taxpayers to hundreds of billions of dollars of bad debt.”
That ought to do the trick and fire up the stock market. In the interim, former GE Chairman Jack Welch said Wednesday “business leaders should focus on their cost structures, reduce debt and take care of their best employees. Leaders of organizations must also communicate as often as possible about their vision and take advantage of investment opportunities as they arise.”
Our leaders, including President Bush, need to stop fueling the crisis of confidence in our country.
This is not the worst economic crisis since the Great Depression. The fundamentals are in place, and we will survive, because that is what Americans do. Congress should feel free to tinker around the edges if they need political cover, but don’t saddle us (and our grandchildren) with a trillion dollars of debt because a bunch of Wall Street executives screwed up and screwed us.
At the end of the evening, one Silicon Valley executive summed things up by stating the least obvious solution.
“Who will have the courage to do – nothing?”