Even these two brilliant and experienced political brains could come to no conclusion.
Since election day the Dow Jones Industrial Average has lost nearly a third of its value, dropping from around 9600 to 6600. The US economy is in freefall and the bailout packages cannot keep up. 4.4 million jobs have been lost since the start of the economic downturn, and the stimulus package, known as the Troubled Asset Relief Program (TARP) was designed to create 3.5-4 million jobs.
The US is hemorrhaging jobs faster than the government can think of ways of creating them, and with the 651,000 jobs lost in February far exceeding expectations, there is no end in sight.
On MSNBC’s Meet the Press this morning, Senators Chuck Schumer (D-NY), Banking Committee Chairman, and Lindsey Graham (R-SC), Budget Committee Chairman, debated the future of the US economy. Yet even these two brilliant and experienced political brains could come to no conclusion.
Sen. Schumer said he thought Obama’s housing program will help stop foreclosures, helping find a bottom to the US housing market, which would then form a base for economic recovery. This prediction seemed more of a hope or a prayer, better suited to Sunday mass rather than a Sunday news magazine.
Although bankers have been busy reassuring investors that TARP 3, the third round of fiscal bailouts, particularly for bad bank debts, will be implemented sooner than any politician cares to admit, Sen. Graham admitted there was little political will for TARP 3.
Sen. Schumer concurred that before TARP 3 could be put into action, the banks would be submitted to rigorous ‘stress tests’ to ensure that the government would not be throwing good money after bad and will not be going to fund ‘zombie banks.’
In the meantime, don’t be surprised if some of those zombies submit to the growing stress of the economy, making the government’s task easier – and cheaper.