opinion

The US economic bailout
by Clarence E. Pilgrim

NASA's space shuttle Atlantis and its seven astronauts are now set to blast off late at night on October 14 from the Johnson Space Center in Houston, for its last visit to the orbiting Hubble Space Telescope. The flight was delayed due to Hurricane Ike. What is significant about this mission is the fact that it is the first time there is an emergency space shuttle ready to blast off if anything goes wrong. Endeavour will serve as the rescue ship for Atlantis, if there is a need.

Against the backdrop of this scientific and logistical achievement, the US economy remains in an unfortunately precarious state of financial flux.

The Bush administration has proposed a $700 billion plan to rescue the economy. According to the president,"[the] rescue effort is not aimed at preserving any individual company or industry." He said that government is the only entity that is capable of buying financial firms' troubled assets, at their current low prices and holding them until their value returns to normal. His argument was based on the belief that foreclosures would rise, millions of people could lose their jobs and "ultimately our country could experience a long and painful recession."

The desperate financial system in an election year has caused both presidential candidates, John McCain and Barack Obama, to re-focus their campaigns on the present crisis. Even though both say this situation should be above politics, the fact is that one of them will move into the White House come January, and essential to their rise is proving to the electorate and indeed the world, that they are showing leadership during crisis by providing workable solutions. As it stands now, more voters believe that candidate Obama has greater credibility on the issue of providing solutions for the economy. It is interesting that one of the candidates wanted to suspend their campaign because of the crisis. If this is really a proposition put forward in seriousness, then perhaps that candidate should reconsider their presidential aspirations. After all, when you are a leader you have to grapple with the most uncomfortable of situations, especially when you least expect them. My advice is to continue with the campaign, and use this as an opportunity to debate the issues.

The man who is really in the hot seat is President Bush, who must find a way of convincing law-makers and indeed the contributors to the Dow Jones index that the bailout is the approach that will work. He believes that this action will "send a signal to markets around the world that America's financial system is back on track." However, an important consideration should be that the bailout is controlled and monitored through oversight duties performed by the appropriate executive body, such as the treasury secretary of the United States, thus ensuring some degree of accountability to the taxpayers.

It would also be prudent if there is a limit placed on very large executive compensation for firms who hope to benefit from this initiative.

For Caribbean nations watching this dilemma unfold, it is an important lesson of what can go wrong in an open market system mixed with other variables such as bad decisions and speculations.

Within the context of the Caribbean Community's Single Market and Economy (CSME), the nations moving along this path must be mindful of the consequences of market forces, and endeavor to put mechanisms in place to address the challenges which come because of the ebb and flow of these "uncertain economic tides" in our Caribbean seas.

A significant starting point towards the regional integration of the region and Financial Security would be the implementation of the following recommendations:

1. The national budget for each member nation of CARICOM should have an adequate allocation for the Caribbean Development Fund.

2. There should be the move to create one CARICOM central reserve bank, within the next five years.

3. All member nations should implement the Caribbean Court of Justice as the final court of appeal within three years

4. The process of harmonizing all international economic treaties and agreements should be done within the next three years.

5. The police and other security services should be integrated to the extent of moving towards a centralized high command within the next five years.

These five suggestions are geared towards achieving the status of a unified state.

It is remarkable how we have advanced with the kind of technology which is present in the space shuttle, but we are unable to exercise the kind of business control which would lead to economic stability.

It is the hope of many that the right decisions are made in Washington DC to prevent the kind of economic melt-down, which would not only hurt millions of US citizens but also their friends and neighbors around the world.

The author is an educator and senior civil servant in Antigua & Barbuda