South Carolina advanced its presidential primary in a move that threatened to shake up the entire primary calendar, while the Federal Reserve worked to respond to unsteady markets.
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And to the analysis of Shields and Brooks. That's syndicated columnist Mark Shields and New York Times columnist David Brooks.
Gentlemen, thank you for being here this Friday night. It's good to see you.
The financial markets, way down, way up, down again. They ended up a little bit down today. The Federal Reserve pumped in billions of dollars. Effect on policy and effect on the body politic, David?
DAVID BROOKS, Columnist, New York Times:
It depends on the spillover. I mean, I think if it's just the financial markets, as the two financial experts we had on earlier in the program seem to suggest, it won't have a broad effect on the body politic.
And the reasons for that are that the world economy is phenomenally strong, as they said. For those of us who are not professional economists, the number I always look at is just productivity, because that's really about the underlying health of the economy. And the latest productivity numbers were, I think 1.8 percent, 1.9 percent growth, which is not fantastic, but OK.
So I think what we're seeing is a basically healthy economy with this housing market and all that, without a lot of spillover, at least in the abstract, on the electorate. But that is not to say there's not a lot of economic anxiety out there.
And to me one of the crucial questions of the 2008 election is that economic anxiety tied to broader anxiety about the war and about the state of the country, or is there something new going on where you could have economic anxiety while we have decent economic growth?
Could that be what's going on, Mark?
Well, I'm not sure, Judy, but I do think that this is the last pillar of the Bush administration has been the good economy that David described. I mean, it's been — even critics have to concede it's been low unemployment, low inflation, low interest rates, high corporate profits.
And if, in fact, this is a real shaking of that, with everything else, the immigration bill gone, no prospect of a domestic agenda, the Iraq war being enormously and conspicuously unpopular, then it really does have political anxiety and political impact.
I think there is not a human face on what's happened so far. I mean, it's not private equity or hedge fund managers or whatever. But I think when the human dimension of people losing their homes, and then those homes going unsold once they're repossessed because of the softening of the market — and this is an economy that's rested very much on consumer confidence — then housing values in the neighborhoods affected where the houses are repossessed go down, I think that's going to have a ripple effect that has both political and economic implications.
We saw one mortgage company go under and laid off hundreds of people, but broadly speaking that hasn't happened yet.
Right. But if it did, it would have some impacts. As I said, I don't think that's happened. I think the broader issue is, do people feel more economically insecure, even while unemployment is low? Do they feel their wages are stagnating?
And then the crucial debate, which I think is shaping up between Republicans and Democrats, Republicans believe that wages may not be keeping up with productivity, but the system fundamentally works. If you get educated, if you get people better educated, they will see their incomes go up. A lot of people on the left think, no, the system is now so fundamentally broken even with skills and education they will not see their incomes grow up. And that leads to radical consequences.