President Bush Speech on Economy October 10, 2008

This morning President Bush again addressed the country in an effort to shore up confidence in our failing markets. President Bush outlines the steps that the government is taking to turning around the crisis. Bush identified the "fundamental problem" as being the housing market decline, which caused banks holding mortgage assets to suffer serious losses. Without understating the problems that the housing decline has created, I am cautious to place too much emphasis on a simplified version of our economic problems. Even if the root of the financial crisis is in the housing market, it is difficult to clearly cast blame in one direction (see Greed is Good).

We might speculate why, after action of the Federal Reserve, Department of Treasury, Securities and Exchange Commission, the FDIC the markets have not responded. And, after all, there have also been the speeches by Ben Bernanke (see Oct. 7 Remarks), Henry Paulson and President Bush on the economy. These speechmakers have intended their words to have a positive effect on the markets.

Yet, perhaps there is not confidence in the market due to a lack of confidence in the policy-makers to take appropriate action. This would include a broad public concern that the system will reward (or at least not punish) wrong-doers in this crisis. Lisa Fairfax, over at the Conglomerate discussed this problem in the context of AIG yesterday. It is no wonder that there is public concern that the Federal Reserve will bailout AIG, but no one will hold management accountable. I agree with Lisa's suggestion that the lack of confidence in our government to hold companies responsible for their share of the blame has contributed to a stalling of confidence in the markets. In order for the actions of the Federal Reserve, the Department of Treasury and others to have their desired effect on market confidence, it would seem that we might need more confidence in those same actors. At least, for now, that seems to be lacking.

— JSM