It's 3am on Wall Street

14.09.2008

During the primary the Clinton campaign posited the idea that a President would face a 3am call on the economy. It looks like one of those 3am calls came this weekend as the government made the decision to let Lehman Brothers go bankrupt rather than bail the firm out. I have no idea whether that was the right decision -- what I do know is that a lot of Americans are going to be watching the financial news with white knuckles today.

There is a tendency on the part of candidates to be cautious about inserting themselves too dramtically into the markets during periods of volatility. No one wants to be accused of saying something that causes an adverse reaction on the trading floor.

Still, this is "a moment."

It's 3am on Wall Street. Will either candidate offer an explanation of the problem and a plan to fix it that will reassure voters and break through the din?

Stay tuned.

Added at 1045am:

My former colleagues on the Clinton Campaign, Mark Penn, and Phil Singer, have also weighed in.

Posted: Sunday, September 14, 2008 9:05 PM with 3 comment(s)

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jwl2672 said:

I'm a current stockholder of Lehman, having bought and held stupidly for the last 7 years. When prices went down, I bought more.

The gov't should not bail out Lehman. They should not have bailed our Bear Stearns either. Let the free market work itself out. Act as mediator, but not as guarantor. But mostly, they should have cracked down on those dirtbag short sellers with their viciously false rumours. Rumours are a self-fulfilling prophecy. Claiming a bank is going to collapse causes a run on the bank which in turn truly causes the bank to collapse when it otherwise would not have.

September 15, 2008 12:23 PM

basman said:

Alls' I can say is that our regulation of many things including financial institutions (and a whole bunch of other reasons) makes me tend, generally, on balance, with all due consideration given, more or less, to approach being happy that I am a Canadian.

September 15, 2008 4:46 PM

lsernoff said:

There is a lot of fear in the air, with cause. Most Americans have a lot of their wealth tied up in in home equity, which continues to go down. For many, the rest of their wealth is tied up in retirement plans affected by the markets.

Neither candidate has offered anything of note: McCain offers the familiar R bromide, less regulation. Obama wants to tax those who are bleeding most profusely to transfer money to those who have little or no blood at all. The spigot of money from Wall Street has flowed to each of them; I suspect it will turn to a trickle for both. Neither wants to pee on the leg of those who feed them.

The candidate who, at this stage in the campaign, begins to say something substantive and sensible might actually gain some votes.

Final comment: thanks to Hank Paulsen; he's done a decent job of trying to put some order into private sector chaos. Mistakes? Maybe. But he, like Rubin, is a distinguished transferee from Goldman Sachs to the public trust.

September 15, 2008 6:49 PM