The Week of Fear

This week scared Americans have forgotten about the silly issues and have been discussing economic policy. They have also forgotten the fear of government interference in the free market. The learning curve has been very steep.

It has been a week for big words in the U.S. Not in the form of promises and surprising moves in the election campaign, but when describing the worst economic crisis since the great depression that started at the New York stock exchange on October 29th 79 years ago. A small army of economic know-it-alls claim no-one has seen anything like it before. And that is why no-one knows how big and serious this crisis really is.

Yesterday, president Bush underlined the seriousness of the situation when he said: “This is no time for partisanship, we need to move urgently needed legislation as quickly as possible without adding controversial provisions that could delay action.”

Because what is happening is deadly serious. The crisis affects the financial institutions, the property market and jobs – a crisis affecting many Americans lives and pocketbooks. And the Americans are using an almost unheard of weapon in an effort to stop the crisis – huge amounts of government money to bail out – or issue loans to, faltering financial institutions.

The Alternative Seems to Be Total Meltdown.

In America the expression “taxpayers money” is used to describe something that is almost sacred. It is used by every politician hoping to get elected to any office in this country. And it is of course very much used in the ongoing campaign for the White House.

John McCain was quick to ensure the voters that he would not use their precious tax money as aid for badly run and faltering financial institutions.

But that was before the Bush administration spent 85 billion dollars saving the insurance giant AIG. Since then McCain has been silent with regards to who should pay for the rescue operation.

He has not repeated the claim that the American economy is in a good state either. Rather, the McCain campaign has released a TV commercial where the Republican candidate explains that it was actually his faith in the resolve and creativity of the ordinary American that made him make his optimistic statement.

It is not likely that a crisis stricken people will believe this explanation. And McCain must accept that some people remember Herbert Hoover – the president that insisted that the crisis of 1929 would pass quickly. He was also allergic to government interference and insisted that interference would only prolong the crisis.

In retrospect he has been condemned for that.

In the USA of today the government are using incredible amounts to create firm ground for the feet of the financial market. It is interesting to see how much convincing this takes from politicians and finance people, but how “quickly and easily” it can be done when a lot is at stake.

The top people of the Democratic and Republican parties will work together with Secretary of Treasury Henry Poulson and Chairman of the Federal Reserve Ben Bernanke this weekend to agree on a rescue package. Few – if anyone – knows what it will contain. The only thing that is certain, is that it will cost the American tax payer incredible sums. But the money will be payed back, says President Bush.

That will not happen in his presidency. However, George W. Bush will be given the blame for a financial crisis on top of the other crises he is responsible for.

“But this isn’t capitalism,” a Wall Street-commentator said dejected during a discussion about the government aid.

In this situation the two presidential candidates – Barack Obama and John McCain – are fighting to formulate the sharpest criticism towards what in this case disdainfully is called “Washington.” And that means everyone in the government, congress, and commissions that failed to see what was going to happen.

Insufficient regulation and even worse control are frequent targets.

But none of the candidates have a lot to show when it comes to economic policies. McCain represents the governing party, and is not very interested in economic policies. Obama is too new to Washington to be able to claim any action that would have prevented this crisis. He has voted with his party on these issues, and the Democrats have had control over congress for the past two years.

Barack Obama and John McCain has at least two things in common: They are attacking Washington and they do not have the solutions.

When you hear their campaigns you would think differently. Because this is about more than economy. They have to show leadership in a time of crisis. And even if they aren’t providing solutions they can still create an impression of understanding, insight and ability for their voters. Who will gain the trust of scared Americans remains to be seen.

What is certain is that the this week of fear has put the economic policy at the top of the political agenda. It has repressed silly bickering about lipstick and who said what. Right it is about the real political questions – and that is a healthy thing.

But the election is still 45 days away. That is a long time in an American presidential campaign.