Students who have written project proposals without full preparation or procrastinators who have stretched the interpretation of essay questions on a final exams to include only the readings they did, understand the importance of confidence. Nervous first-years can fool a class into thinking they know what they are talking about if they deliver their points with strong confidence. A graduate assistant may buy seniors rushed Miami Plan essays, even if they combine two unrelated topics into the senioritis version of a brilliant and unique answer, if they write strong sentences in which they firmly believe.
Students know confidence; they can get one through a challenging situation where they don't have all the facts or understand all the circumstances. Recovering from a financial crisis requires recovering from the confidence crisis, despite no exact precedent from which to base decisions. There is no arguing we are in unchartered waters. The most comparable situation is the 1930s' Great Depression, but many things have changed since then. We are now in an area of a global economy, 24/7 media coverage and an increased access to a wealth of information.
Credit requires belief from both parties-those issuing the credit and those holding it. Neither one of these parties believes in the other anymore. Banks are arguable sitting on funds from the Toxic Asset Relief Program because they don't believe in the American public anymore. People aren't taking out loans or investing through financial intermediaries because they don't believe the banks have their best interest in mind.
Following the March 2008 fall of Bear Stearns, Sen. Charles Schumer (D-N.Y.) said "Confidence is so important, the quality of the asset matters less than the confidence." A year later, the significant role that confidence needs to play in our economic recovery is only beginning to be realized.
The American public lacks confidence in the government, financial intermediaries and the free market system as a whole. Secretary of Treasury Timothy Geithner should prioritize creating confidence into his team's plan for economic recovery. It is understood that this will be a long and painful recovery full of trial and error, with no one knowing the best plan of attack, but the government needs to take swift action in restoring confidence. People have no confidence in their banks or brokerage holdings. They have seen money disappear and the fear has made people want to take their money out of the banks.
The Obama administration needs to fix the confidence problem for the stimulus to impact the average American. Big numbers don't matter if they aren't understood. It is more important for the government to allocate money in a way that will directly impact the people. Pumping almost $800 billion into the economy through government spending or tax cuts will not restore confidence unless Americans understand how that money will increase their bank accounts.
The government needs to work with the Federal Reserve to assure Americans they will help not only the banks, but even Joe the plumber. Writing unemployment checks doesn't create confidence like increasing job opportunities through immediate infrastructure projects. Americans will not spend or invest the tax cut they may receive if they feel they need to save for possible inflation in the future.
The media also need to understand the influence of their words. It is their responsibility to inform the public of the bailout's details and how they will benefit, but loaded words should be used with caution, not for dramatic effect. Words such as bailout, crisis, plunge and collapse should be used when appropriate, but the 24-hour news cycle constantly inciting fear and uncertainty in Americans is not going to get us on the path to recovery any quicker. The excitement of the reports and the tendency to be overly enthusiastic aren't helping the American people.
The answers aren't simple, one-sided or black and white. This won't be easy. Our children and great-grand children will be sitting in their economic and finance classes discussing how we let the country get in this mess. America should strive to make this an opportunity for future generations to learn from our mistakes and study our recovery methods.
In the meantime, while these current economic conditions are terrifying to many and confusing to most, they can be seen as a unique opportunity to try new methods, learn from the past and prevent this from happening in the future. Our children will likely ask why we let people with no income nor assets take out loans for a home. Hopefully we will be able to tell them that we worked together to recover. We can admit that we made many mistakes as a country, but worked together to not only weather the storm, but learned how to dance in the rain.
Enjoy what you're reading?
Signup for our newsletter
Read More
How one professor and her classes are preserving Oxford’s Black history
By Sean Scott | March 20, 2024Jazma Sutton, an assistant professor of history, teaches The Black Midwest (HST 350Q) and Black Women in America (HST 450D) classes. In both courses, she has students working with the Smith Library of Regional History and Miami’s archives to document and preserve Black history in Oxford.
Miami faculty members recount Freedom Summer in new documentary
By Luke Macy | February 25, 2022After seven years of work, “Training for Freedom,” a documentary highlighting Oxford’s involvement in the Freedom Summer of 1964, premiered on PBS Western Reserve on Valentine’s Day.
“Documenting the COVID-19 Pandemic”: History in the making
By Alice Momany | August 29, 2021In March 2020, Miami University’s archives launched “Documenting the COVID-19 Pandemic,” a collection focused on life during the COVID-19 pandemic.