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Analysts David Brooks and Ruth Marcus take up the U.S. economy's shaky health and Sen. Barack Obama's trip to the Middle East and Europe, which has drawn vast media coverage and was described by Sen. John McCain's camp as a publicity stunt.
And to the analysis of Brooks and Marcus. That's New York Times columnist David Brooks and Washington Post columnist Ruth Marcus. Mark Shields is off tonight.
Good to see both of you.
Now we have heard from Paul Solman talking about risky behavior, bailouts.
David, let's focus right in on the federal, the Bush administration proposal to prop up Fannie Mae and Freddie Mac.
What do we think?
Well, to me, it is the long-term implication that is the most interesting and that Bernanke's policy comment in Paul's piece really gets at.
If the government and even a Republican administration is going to clean up a mess and prevent a failure, then does that mean the government is going to want to get involved in the way business is done all the way along the way?
In other words, if we're cleaning up the mess, we are going to regulate you. And are we at the cusp of a long period of much more intense regulation of the financial markets? And I suspect we are.
Well, because the government says, hey, we clean up the mess. You losing money, we have to pay for it. So, we are going to try to prevent you from losing this money. Now, the question will be how exactly do you regulate. But, to me — and the government is really terrible at this — but, to me, the interest in Congress in particular is going to be there to vastly increase the regulation of the financial markets.
Well, I think that the British comedians really got to the point, which is what we need to do is figure out a way to regulate before the mess, rather than after the mess, because, if you regulate after the mess, you are going to get all the cost of regulation with none of the benefits. And you're going to have to pay the cost of the cleanup.
What you need to be doing is figuring out a way to find the sweet spot of regulation between a command-and-control government, over-regulation, which we know is going to squelch economic growth, and the laissez-faire — What was the British word? — cock-up that we are experiencing right now.
I didn't know you could say that on American TV.
Am in trouble? I hope not.
I mean I think that is the political direction we're heading. But it's not as if Fannie Mae and Freddie Mac were unregulated. They are semi-government institutions. And the regulation has been there in some degree. It just hasn't been very effective. And it could be, it can't be very effective.
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