The Analysis

American citizens are very concerned with the current state of the economy. Unemployment rates have reached 6.1%, food stamp participation is on the rise, and global markets are facing major recessions. All of these facts point to disaster, and the American public seems to agree. A poll taken by CNN reported that most people see a depression as likely. While economists claim the U.S. is far from a recession, the evidence does not look good either way. With such clear signs of crisis, the real question is: Does the evidence in the "rescue plan" appear that it will actually rescue us?

I think there will be glitches that appear in the rescue plan through a trial and error process, but overall will help the economy and get the U.S. market back on the right track. According to the proposed bill, Fannie Mae and Freddie Mac will be reconstructed by being placed under a conservatorship, a similar status to bankruptucy. Under government control, the companies lose many privledges, including their rights to lobby and have power in politics. The conservatorship is targeted at getting the companies in a stable place. Their ownership of about $6 trillion in U.S. home loans makes their recovery vital to the nation's market. The plan will auction off the mortgage-backed securities, which have been reduced by about 20% of their original face value. This will put money back in the market and hopefully drive inter-bank rates down, tremendously helping credit in the U.S.

In relation to the election, the financial crisis has placed a large amount of blame on the Republican party. McCain therefore recieves a lot of flack for the Republican ideals of deregulation, and not to mention his relations with the Keating Five, another bailout-type scandal that he and four other senators were caught in covering. Then again, take a look at the video in my last post and you may see a completely different spin, where the Democratic party is partially responsible. Obama was quoted saying that McCain "cannot be trusted to deal with the crisis because his strings are pulled by lobbyists, who shred consumer protections and distort our economy so it works for the special interests”. Yet, the video I mentioned shows Obama recieving around $42,000 for campaigning from Fannie Mae, while McCain only recieved a little over $800...so whose strings are being pulled? In all honesty, regulation may have prevented what the nation is currently held in, but as I have mentioned before-it is the greed (that is present in both parties) that cause scandals such as the lovely subprime mortgages to create disaster.

Both parties within the 2008 election play a part in the circumstances of the United States. The Republicans don't regulate enough and Democrats overregulate. What gives? The Senate and House of Representatives are comprised of individuals from varying parties, and their collective ideas influence the state of our nation. Therefore it is important for all voters to keep this in mind and understand that the financial crisis is now allowing Obama and McCain to show what they can do, and bring a lot of hype. It is our job to see through all the hype and determine what is fact and fiction, and what party's policies will really help the economics of our country.

I think both candidates have their strengths and weaknesses. I have always thought of myself as a Republican but with the state of things in the U.S. I think policy changes are definitely in need. McCain's proposed economic plan includes cutting government spending and lowering taxes. He wants to freeze all spending on government programs for a year to see which ones truly have an impact on the nation. This is a good idea in theory, to save the U.S. money and help our economy by not wasting money on social programs. At the same time though, we cannot only focus on the financial crisis. To be a successful nation it is pertinent that we keep all facets running as smoothly as possible. Freezing a years worth of funding for needed programs could be devastating. Obama, on the other hand would not support this idea and although his plan would raise taxes for wealthy and be a little more expensive over the next four years, it would put the U.S. in less of a deficit than McCain's plan. I find myself agreeing with Obama on his proposal because I think the outcome is more favorable than McCain's. From the way he presents himself and his ideas on "tough-love" for the corporate world, show that he is a candidate who might actually do more for the people. Also, the United State's recent history of Republican ruling and deregulation policies has not served the economy well, so I think it would be wise to try a new approach.