McCain Advisor: “Quit Doling Out Bad-Economy Line”

While the financial markets are reeling this morning from weekend drop off of historical proportions, Donald Luskin, a McCain campaign advisor’s op-ed is still fresh from its Sunday printing. Some of my favorite excerpts:

Sure, there are trouble spots in the economy, as the government takeover of mortgage giants Fannie Mae and Freddie Mac, and jitters about Wall Street firm Lehman Brothers, amply demonstrate. And unemployment figures are up a bit, too. None of this, however, is cause for depression — or exaggerated Depression comparisons…..

…Even if Obama is right that the foreclosure rate is the worst since the Great Depression, it’s spurious to evoke memories of that great national calamity when talking about today — it’s akin to equating a sore throat with stomach cancer. According to the MBA, 6.4 percent of mortgages are delinquent to some extent, and 2.75 percent are in foreclosure. During the Great Depression, according to Wheelock’s research, more than 50 percent of home loans were in default….

…Full disclosure: I’m an adviser to John McCain‘s campaign, though as far as I know, the senator has never taken one word of my advice. He’s been sounding a little pessimistic on the economy of late, too…

…A housing “slump,” a housing “crisis”? A “severe” price decline? According to the latest report from theNational Association of Realtors, the median price of an existing home is up 8.5 percent from the low of last February. And according to the U.S. Census Bureau, the median price of a new home is up 1.3 percent from the low of last December. Home prices may not be at all-time highs — and there are pockets of continuing decline in some urban areas — but overall they’ve clearly stopped going down and have started to recover. So why keep proclaiming a “crisis” after it’s over?…

…McCain campaign adviser and former U.S. senator Phil Gramm was right in July when he said that our current state “is a mental recession.”…

…Whatever the political outcome this year, hopefully this will prove to be yet another instance of that iron law of economics and markets: The sentiment of the majority is always wrong at key turning points. And the majority is plenty pessimistic right now…

While I certainly don’t agree with the overall assessment, on a morning like this one, it is worth reading an opposing view. Panic sets in quickly sometimes, the essential question we all should be asking is…”is this just a severe, necessary market correction or the start of something far, far worse?”

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One Response

  1. Great post. I will read your posts frequently. Added you to the RSS reader.

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