Is the 2008 Election Over?

Posted by: Michael Mandel on August 16

Back in early 2006, I wrote

When the housing boom is over, the politics will begin…Democratic politicians fail to understand that their economic attacks on the Bush Administration can’t really take hold until the housing market goes south. Rising home prices are an engine of prosperity for the typical American family. Until that engine goes in reverse — which may be starting to happen — doom-and-gloom politics won’t really resonate….

Democrats have to be ready with their own package of reforms to cushion the housing downturn, even if the measures add to the budget deficit. There’s no excuse for not having made plans in advance.


Well, that time has come. It will be much easier for the Democratic nominee—whomever he/she is—to make the case that the economy is heading in the wrong direction if the housing market is in crisis.


That point is now being made by others. A Boston Globe article

The more the crisis ripples through the economy, the more it will help Democrats make the case that Republican economic policies have spurned middle- and lower-income families, some campaign watchers said.


“It’s an enormous opportunity for the Democrats to criticize the failures of the Bush administration, the fallout we are seeing from laissez-faire economic policies,” Alan I. Abramowitz, a political scientist at Emory University, said yesterday.

And if the unemployment rate starts to rise? Then the Republicans might as well kiss the White House good-bye.

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Reader Comments

Thomas A. Coss

August 16, 2007 10:48 PM

The opportunity is for politicians to feel good while introducing simplistic and incoherent solutions to misunderstood problems.

just me

August 17, 2007 09:14 AM

why are we, "taxpayers" , bailing out " bad loans"?

ha

August 17, 2007 01:14 PM

HAHAHAH

Your kind of left wing babble is why people are ditching magazines like Time and Businessweek in drove.

Keep writing dufus. You will soon be out of a job and have more things to be angry about.

Mike Mandel

August 17, 2007 01:56 PM

Left-wing? Hardly. Just an observation. I work pretty hard to keep my writings, including this blog, nonpartisan.

Brandon W

August 17, 2007 03:51 PM

I'll back Mike that he keeps things non-partisan around here. Unfortunately, for some people on the far right anything that isn't 100% with them is against them, and is dimissed (or attacked) as "leftist/socialist/communist drivel". It's one of the reasons we have no rationality or dialogue in our current political climate.

MJONSON

August 17, 2007 04:39 PM

I'd love to know exactly which 'republican economic policies' have caused the housing market to crash?

The cause of the housing market to crash was rampant speculation by un-educated ignorant borrowers biting off more than they could chew.

Do John Edwards and Commie Clinton understand that increasing government regulation on mortgage companies will INCREASE the cost of doing business which will in turn INCREASE the cost of purchasing a home?


This blog posting on the part of Mandel is extremely irresponsible and at best, ignorant and one sided. You're leaving out far too many facts, friend. I'll leave you with the final paragraph of the Globe story, which you should have put into your own posting as well:

"I really don't think it's a party-specific problem or an administration-specific problem," she said. "It is a problem in general."


Thomas A. Coss

August 18, 2007 09:19 PM

I too, like Brandon, have enjoyed Mike's objectivity and non-partisan writing. In part, it is why I learn so much here.

Mike Mandel

August 19, 2007 07:28 AM

>>I'd love to know exactly which 'republican economic policies' have caused the housing market to crash?>>


MJONSON,

I never blamed the housing market crash on republican economic policies. Just take a look at all of my blog entries and articles--I don't think I ever blamed it on anyone.

My point, which I stand behind--when the housing market was strong, it helped Americans feel good about their personal situation. With the housing market in trouble, the party in the White House is going to be in trouble as well.

J.Liptak

August 19, 2007 07:15 PM

Thirty five years ago when we bought our first house, standard procedure was 20% downpayment, credit check (you couldn't have a foreclosure on your record), only count the husband's salary because the wife could get pregnant. Simple but effective. The greed, fraud & ARM's, people living beyond their means & lenders greedy for those heavy closing costs even if the buyers can't afford it are who I blame. Figures don't lie, but liars can figure.

Kartik

August 20, 2007 08:48 PM

I can confirm that Mike Mandel tries to keep it as non-partisan as possible. The only slightly political article he wrote was after the 2004 election, titled "Faith, Hope, and Progress", which leaned slightly pro-GP.

So he is not a leftist. "Ha" is a fool for jumping to that conclusion.

I can officially confirm, however, that Brandon W is a leftist, through numerous postings here. He cannot concede that anything about the current economy is good for those not in the top 1%. He is exactly the equivalent of "ha" in this regard.

Brandon W

August 21, 2007 10:16 AM

Kartik (et al),
It's the Top 10%.... at least get me right. I'm neither left nor right, I actually annoy both sides; if you were on the left you would see that. But you've show yourself to be on the far right, so you see everything as "left". You say that I won't concede anything good about the economy, but you would be quick to agree with me if a Democrat were in power. You're only a cheerleader for the current economy because your preferred party is in power and you want to attribute success to them. Be honest. I don't attribute the economic boom of the late-90s to Clinton, and I don't attribute the crash of the early 2000s to Bush, because I look at things objectively. Instead, you take the tired tactic of attacking anything that doesn't glorify your preferred right-wing political party as being "leftist", socialist, communist, or whatever your slander-of-the-day is.

If you really want to know where I stand: I'm extremely libertarian at the federal level and left-leaning-moderate at the state/local level - socially liberal and fiscally moderate-to-conservative. I don't believe propaganda about capitalism from either side of the political spectrum. I think both major political parties are faulty and dishonest.

It seems pretty clear that there is a major wealth gap that is growing, and it is the top 10% (or so) of the wealth spectrum that is inordinately benefiting from the existing economic structure. Will that change? I doubt it. It is the nature of mankind for there to be a dominant, wealthy minority that controls power. That hasn't changed throughout history and it won't change now. Efforts by the silent majority to change that during the 20th century started to make an impact, and we saw a closing of the wealth gap from the 1930s to the 1970s, but that course has been reversed by the powers-that-be and, I believe, permanently reversed. We are heading back in the other direction for the foreseeable future.

I think you, and others, believe that I'm trying to bring attention to this because I'm a communist that wants to set the course back in the direction of the 20th century. I'm not. From an academic standpoint, I'm just fighting for what-I-believe-to-be honesty in the discussion. From a practical standpoint, I want to encourage people to find their way into that Top 10% Economy(tm). Be among the royalty, the merchants, or even the artisans... but don't be among the peasants.

ZACH-F@ EMORY

September 23, 2007 03:05 PM

Regarding the wealth gap problem:

If someone makes $100,000.00 annually, and another makes $10,000.00 annually, and both annual incomes increase at the same rate of 5% for one year, then you end up with incomes of 105,000.00 and 10,500.00, respectively. Thus, even when both incomes grow at the same rate, the gap continues to widen between the two (in this case, it widened by 4,500.00 annually). I am concerned that we are looking at net figures instead of percentages, which I believe are a better comparison since we need to guage income relative to inflation and consumer price fluctuations.

The solution to this problem, when it is framed in the context taken by many in the media, is either through accelerating the growth rate for the lower incomes (raising minimum wage) or constraining that of the higher ones through taxation that is purposed with increasing wealth at the lower end of the spectrum (either directly or indirectly). The former can be inflationary, which causes purchasing power to not go as far as it did previously and thus offers only temporary relief (if it even offers any at all, due to the speed of market reaction in today's world). The latter leads to deadweight losses and constrains the growth and development of small businesses that create value for society.

So the question that remains is: what adequately articulates the problem of a widening wealth gap if it is indeed representative of overall value losses to society relative to inflation? What are some proposed solutions if this is indeed a problem?

Thank you for your interest. This blog is no longer active.

 

About

Michael Mandel, BW's award-winning chief economist, provides his unique perspective on the hot economic issues of the day. From globalization to the future of work to the ups and downs of the financial markets, Mandel-named 2006 economic journalist of the year by the World Leadership Forum-offers cutting edge analysis and commentary.

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