In an interview with CNBC in August, investor and businessman Warren Buffet said, “You don’t know who’s swimming naked until the tide goes out. Right now, Wall Street is a nudist beach.” Buffet was fittingly quoted by Carlos Asilis, a specialist in global emerging market equities and managing partner at Glovista Investments, at a panel discussion held at the University of Miami School of Business Administration Tuesday night. The discussion was titled “The Economic Crisis: How the Presidential Candidates Will Change the Future of Our Economy” and was a part of “A Dialogue for Democracy,” a series of events aiming to inform UM students about the key issues in the 2008 presidential campaigns.
Panelists included Manuel Santos, professor and James L. Knight chair in economics at the School of Business Administration, who served as the moderator; Asilis; Ricardo Lago, a former senior official of the European Bank for Reconstruction and Development; and Christopher Cotton, an assistant professor of economics.
“This is a time of promises and plans,” Santos said. “But there is very little discussion on how these plans are going to be funded.”
Cotton, who specializes in game theory and the political economy, which he described as the strategic interaction between politicians, special interest groups and voters, discussed how the economic crisis will change the election. He said that a CNN poll in September showed that 58 percent of voters believed that the economy was the most important issue in the election, and that 47 percent of people polled blamed the Republicans for the current economic situation while only 2 percent blamed Democrats.
“It’s clear that the focus on the economic crisis in the media and debates benefits [Democratic presidential candidate Sen. Barack] Obama,” Cotton said, adding that McCain’s handling of the financial crisis received an approval rating of 33 percent, while 43 percent of voters approved Obama’s methods.
While Cotton’s statistics from CNN showed that poll takers placed blame on Republican candidate Sen. John McCain rather than Obama for the economic crisis, studies have shown that Democrats are 23 percent more likely to watch CNN than Republicans, according to a 2006 Scarborough study of national consumer shopping patterns, media behaviors, demographics and lifestyles, so these statistics may be biased.
Cotton said that support on financial issues shifted greatly in Obama’s favor with the government takeover of insurance company AIG and that the bailout plan and the presidential debates also had an effect on public opinion. Since the topic of the economy cannot be avoided in today’s debates, Cotton said that McCain’s best strategy would be to focus on non-issue characteristics, such as questioning whether or not Obama is trustworthy or adequately experienced, which many Americans have doubted.
McCain is perceived by poll takers to have a better ability to work well with both parties to get things done in Washington, can manage the government more effectively, puts the country’s interests ahead of his own political interests and is more honest and trustworthy than Obama, according to a USA Today/Gallup poll conducted last month.
“The heels are on, the gloves are off,” Republican vice-presidential candidate Gov. Sarah Palin was quoted as saying, referring to the GOP’s eagerness to take on Obama.
As for the bailout plan, Cotton said that congressmen took much criticism for their support.
“It wasn’t popular, but it’s what they thought was right,” Cotton said. He noted that congressmen running for re-election were less likely to vote in support of the plan than those who were retiring. “This shows the long-term effects this bill may have on Congressional politics,” he said, adding that congressmen seemed worried about future risks.
How will all of this impact future policy?
“Either candidate will implement policies to make sure the crisis does not happen again,” Cotton said. “It is going to be increasingly difficult to get Congress to pass any large budget plans, however, which will be most hurtful for Obama.”
Asilis predicted that whether Obama or McCain takes over the White House, debt levels will continue to rise before a solution is reached.
“There is a vicious cycle component to the adjustment process,” he said.
Asilis also stressed international relations as a major factor in the economic well-being of the United States.
“We have an interconnected economy,” Asilis said. “Development in the U.S. has an important impact on the European continent, the Asian continent, and our Latin American neighbors.”
Asilis added that the solutions to the challenges ahead lie in growth from trade with fast growing countries such as India.
“It is troubling to see the financial sector suffer on a global level,” said sophomore Mickalina Novikova, a finance major. “It’s important for students to stay informed, as this crisis may greatly affect the job market. I attended the presentation because I am concerned about the impact that the current economic crisis is going to have on my future.”