After a month of campaigning that involved both presidential candidates exchanging personal blows to one another, the chaos of Wall Street over the past two weeks has brought the two nominees back on topic, talking about what voters now consider to be the most important issue in this year’s election – the economy.

In regard to the economy, both candidates offer a very different vision of where to fundamentally take the country. Obama favors stronger consumer protections, regulatory oversight and more government intervention, while McCain prefers a market based system with less involvement from the federal government – a position that has changed since the recent plummet of the stock market.

The stock market’s recent woes have led to a proposed 700-billion dollar bailout plan by the Bush Administration that is intended to rescue failing financial institutions. This incident has put both candidates on the spot as Americans wait to see how they will respond in times of crisis. 

Saratoga County Republican Committee Chairman Jasper Nolan said greed has been a big part of the problem in terms of how Wall Street has gotten to where it is today.

“It is a very challenging time and quite obviously you can say part of the problem is greed on the part of the individual and not as part of the system, although there were some apparent weaknesses in the system as well,” Nolan said.

Nolan, a retired history and economics teacher, said the American people should have faith in Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernake’s bailout plan because what they have put together will bring back stability and in the long run guarantee a safer, better system than it did before.

“I have a great deal of confidence in what they are doing,” he said.

Charles Wait, President of Adirondack Trust, said the bailout is an outrageous plan, but most likely a necessary one.

“It is just rewarding people who made terrible mistakes and defrauded the system,” he said. “But unless it is contained it may lead to a recession and it may even lead to a recession if the bail-out is approved.”

Paul Calhoun, Professor of Business and Management at Skidmore College, said the idea that the government would buy troubled assets from a group of financial institutions is not an unprecedented occurrence.  In the late1980s, the Resolution Trust Corporation was formed in response to the savings and loan crisis. During that time the corporation closed or otherwise resolved 747 thrifts with total assets of $394 billion. Calhoun said the major difference this time is that the amount is a whole lot more and the definition of distressed assets is less well defined.

“The idea makes sense but it is still a moving target,” Calhoun said. “The amounts are very significant in terms of total federal debt and gross domestic product and no one really knows whether $700 billion will be enough or not.”

Elliott Masie, owner of the Masie Center in Saratoga Springs, works in the world of technology and said one of the things technology has done is take away the natural barriers that isolate economic problems so that something can happen in America and then all of a sudden it is happening all over the world.

Masie said he feels some of the problem is structural, but since we are now living in a global economy there are many other forces that have brought us to where we are today. One of those positions Masie recognized was an over-abundance of deregulation in certain financial institutions.

“We are now seeing Republicans and Conservatives who would never say the word regulation before standing on the steps of the White House and recognizing that is the case,” he said. “We are going to have to have leaders who are willing to tell the American people bad news occasionally and that includes the fact that you don’t tell Americans that the fundamentals of the American economy are strong.”

Calhoun expects that regulation is going to start being implemented in parts of the financial world that have not been regulated in recent years. He said institutions like banks and insurance companies have been regulated tightly, but what have not been regulated are investments by large institutions who don’t take deposits. That means investment banks, hedge funds and private equity firms who have become very big components of the economy are going to be facing more regulation than they ever have in the past.

Calhoun believes the biggest obstacle for the next president is going to be restoring confidence in our economy, which he said is partly what they are already doing by calling for more regulation.

“Once confidence is restored, it will take a long time to put these regulations in place and be effective, but if the government announces clear intent to make changes, that should help restore that confidence,” he said.

Calhoun said the two fundamental things that are going to continue to help the economy for now are the ideas of technology and globalization – a thought that is also shared by Masie.

“Technology has helped improve productivity in the economy for decades and will continue to do so, while globalization has allowed the United States to rapidly grow due to the adoption of more and more countries into our economy,” Calhoun said.

Both Masie and Calhoun also agree on the fact that the major reason America has found itself in this mess is that for too long people were able to spend above their means and borrow money they couldn’t afford to pay back.

“We have created a set of behaviors that are evident on Main Street and Pennsylvania Avenue, which says you can go buy anything you want whether you can afford it or not, and if you can’t afford it take out another credit card, and if you can’t afford that credit card, take out another credit card to pay for the other credit card,” Masie said.

According to Masie the indicators of what was coming could be seen this summer in Saratoga Springs when attendance numbers at the track significantly dropped. He said people were not driving from far off distances and people who used to come and stay for three weeks were only staying for one.

“The reason people were doing this is because they were feeling the affects of tough economic times,” he said.

Wait said that even with all the current economic problems, Saratoga Springs is still growing and doing better than most places in the country. He pointed to the fact that even with all the obstacles the track faced this summer – which included NYRA’s bankruptcy issues and poor weather – numbers were still up compared to three years ago. He added that the Saratoga County Water Authority has recently raised more than $44 million dollars through the sale of bonds in order to complete a county waterline that will take water from the Hudson River in Moreau to southern Saratoga County and the Luther Forest Technology Campus.

“The fundamental building blocks of a strong economy are still here,” he said

Although Saratoga Springs seems to be avoiding the economic pitfalls that most areas throughout the country area facing, Calhoun believes America is currently in a recession. The good news is he doesn’t believe it is headed towards a state of depression. His optimism is driven by some self-conducted research that has made it apparent to him that debt increases are evident in all sectors, not just in government and companies, but in individual’s balance sheets.

“The amount of debt people have been taking on has been rising rapidly for decades, but that rise is flattening out and when people can no longer borrow as much to do what they want to do it’s going to slow down the economy, so one of the major underpinnings for economic growth which has been the increase in debt is going away,” he said

With all of this chaos facing the American economy, the biggest question facing both campaigns right now is, ‘who is better suited to lead America through this crisis?” And the collective consensus from Nolan, Masie and Calhoun is neither McCain nor Obama alone have the capability to fix the problem.

“Let’s be clear the future President can’t fix this,” Masie said. “It is ultimately going to be a combination of what the president does – of what both houses of Congress in a non-partisan way do – and also what we do globally.”

Nonetheless, Nolan feels a combination of McCain’s excellent staff of economic advisors and his experience on economic issues will help him get America through the current crisis, while Masie believes Obama is the right candidate to take on the economy because of his understanding of economic issues, his willingness to reach across party lines, his ability to create credibility throughout the world and his understanding of the needs of the American people due to his work as a community organizer.

Calhoun said that currently both men are on a steep learning curve as is the whole institution of government. According to Calhoun everyone from officials to CEOs of major financial institutions are struggling to understand what exactly is going on right now.

“Both of them have a lot to learn in a real hurry to deal with this,” he said. “I suspect one factor that will influence people on who to vote for will depend on which person is better able to learn faster and do the right things.”

Either way the economy is presently looking like it may be the determining factor in who will be heading to the White House come January. The American people will now have to decide who will be the best fit by November – although in the long run the issue may be bigger than both

candidates.

“It isn’t going to just be pulling the Barack Obama or John McCain lever we are going to have to get past slogans,” Masie said. “Beyond the partisan side it is a fragile time and we are going to have to talk to each other in a very open and honest blunt way if we expect to get through this.”