I was very keen on seeing President Bush pitted against Senator Kerry in the debates leading up to the U.S. Presidential elections. Of course, my big interest was what would be said about our economy.
I’m not sure if it was in the first or second debate, but there was a statement made by President Bush that has stuck with me. There was a question from the moderator about the economy and President Bush started his answer something like this:
“Six months before I took office, the stock market had its worst decline in almost 70 years.” Now please, this may not be an exact quote, but this is the essence of what I heard. I couldn’t believe President Bush admitted that he monitors the stock market!
Now I know the government has an interest in the well being of its citizens. I also understand the happier consumers are, the more likely they will spend into the economy, thus spurring growth. I guess what amazed me was the admission made by President Bush that he knew the stock market suffered from such a bad fall.
So what did President Bush do when he was told about the market’s sharp decline after the tech bubble burst? I really don’t know if he did anything and I may just be speculating here.
But I would not be surprised if President Bush met with Fed Chairman Greenspan and if the conversation went something like this:
Greenspan to Bush: “The tech-bubble burst and the stock market is in a nose dive. If this continues, consumers will lose confidence and stop spending… and that will send us into a deep, deep recession.”
Bush to Greenspan: “I just got elected. The last thing I need is a Japan ‘part two.’ What can we do to make sure consumer sentiment doesn’t collapse and the economy keeps humming?”
Greenspan to Bush: “We can drop interest rates drastically, so low in fact that consumers will be tempted to borrow like mad. Their borrowings will result in spending, which is what the economy needs.”
Bush to Greenspan: “Let’s do it.”
And there, my dear friends, you have history made. In the next Profit Confidential, I will continue my hypothetical conversation between Bush and Greenspan.