Over the past few years, we have witnessed our economy sinking little by little. Within the past few weeks, the American economy faced its biggest hit so far with the failure of numerous companies, the bailout of not only Fannie Mae and Freddie Mac but also the biggest mortgage lender AIG, and the government being forced to pump $700 billion dollars to try to keep the American economy afloat. Additionally, oil prices jumped $25 in just one day while the DOW fell 777 points. The panel on September 21st—‘A New Administration: What Will It Mean for the Economy and American Real Estate Markets?’—discussed current economic issues facing Americans today.
The panelists debated about whether or not the government should have bailed out AIG, Fannie Mae, and Freddie Mac. Ole Miss economic professor William Shughart II stated that he thought that the government should have stayed out of the economic situation and not bailed out AIG or any other company. However, Bill Rayburn noted that this was the only option and that the United States government must step in and intervene when situations are this dire and change is needed. He remarked that if we had not bailed out these companies, then economies around the world would have suffered greatly and no one would have trusted our governments (or our markets) enough to lend the United States money to try and help the economy recover from recent failures.
The discussion also turned to the topic of small businesses and the effects that this economy and the future president might have on them. Small businesses have been feeling the effects of a suffering economy since the spring of 2006. While banks were willing to pass out mortgages to unqualified candidates like they were candies, small businesses were not able to get loans thus causing a record low number of bank loans received by small business. These companies have had to turn to higher interest companies—such as credit cards—to obtain much needed loans. This process hinders small businesses in America, which provide up to ninety percent of new jobs in this country. However, it is not just the lack of loans small businesses are complaining about but also the fact that the government monitors small businesses incredibly strictly but, as shown by the current situation, the government is not closely monitoring big businesses (especially investment banks). One panelist even stated that the situation could get even worse for small business owners if Barack Obama is elected president. His plan increases taxes for those who make above a certain amount, but the way in which many small business owners fill taxes would put them above that amount thus increasing their taxes and burdens.
With panelists speculating that the economy might not hit its worst until the second half of next year, I bet the debate commission wished that they had kept Ole Miss’s entire debate topic as domestic issues instead of splitting time between domestic issues and foreign policy.