Financial Analyst Warns Inaction Will Lead to 'Mass Starvation'
Despite the âpopulist uprisingâ to block the economic bailout, President Bush signed a $700 billion rescue plan Oct. 3. The bailout spurred much debate, including a second dispute between financial analysts Peter Schiff and Stephen Leeb on CNN.
CNNâs âYour $$$$$â hosted the heated discussion on Oct. 4. In it, Schiff and Leeb argued about the need for a bailout â which Schiff termed a choice âbetween freedom and socialism.â In contrast, Leeb referred to it as a choice between inflation and starvation.
Delaying a bailout would cause âmass starvation, not just in this country, all over the globe,â according to Leeb, president of Leeb Capital Management and frequent âYour $$$$$â guest. He later repeated the frightening claim saying, âif we don't do something, farmers won't be able to grow their crops and the world will starve!â
CNN host Christine Romans compared the financial situation to a âdoomsday scenarioâ similar to âanticipating nuclear warâ before pushing intervention. âShouldnât it be the responsibility of the federal government to make sure that, even though it might have caused the problems, we have to mitigate disasters?â Romans asked.
Even after Romansâ question, Schiff took an anti-bailout stance. President of Euro Pacific Capital, Schiff said government intervention âwill pour gasoline onâ the problem that could create a âhyperinflationary Depression.â
âIf you want the fire to go out, you need to let the free market work,â Schiff said. He opposed the bailout plan saying that it wonât work and would result in more bailouts and more government intervention. âThe stock market will keep falling and the government will take more power and they'll create more damage.â
Leeb countered, arguing that without intervention the free market would grow economic instability and ultimately cause a crisis requiring a higher amount of government control of the economy, âa dictatorship maybe.â He attacked Schiffâs position saying, âI donât want to be saluting a dictator in this country, but thatâs what youâre advocating.â
Later in the show, the âCNN senior money teamâ returned to the bailout discussion. Romans noted the persistent âpopulous outrageâ against the bailout package and asked why many Americans opposed to the bailout are âundeterred in their hatred.â
CNN correspondent Susan Lisovicz asserted one reason that the bailout has met so much opposition: âI donât think that it was ever sold to the public as clearly as it should [have been].â
CNNâs Jennifer Westhoven blamed a âcredibility gapâ for alienating citizens from supporting the bailout bill. âWhen you constantly have officials saying things that turn out to be untrue or extremely questionable [about the economyâs stability], even if theyâre true by the letter, people just donât believe it right now.â
Westhoven suggested that âgapâ stood in the way of people believing that the bailout was necessary.