Despite the “populist uprising” 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.
CNN’s “Your $$$$$” hosted the heated discussion on Oct. 4. In it, Schiff and Leeb argued about the need for a bailout – which Schiff termed a choice “between freedom and socialism.” In contrast, Leeb referred to it as a choice between inflation and starvation.
Delaying a bailout would cause “mass starvation, not just in this country, all over the globe,” according to Leeb, president of Leeb Capital Management and frequent “Your $$$$$” guest. He later repeated the frightening claim saying, “if we don't do something, farmers won't be able to grow their crops and the world will starve!”
CNN host Christine Romans compared the financial situation to a “doomsday scenario” similar to “anticipating nuclear war” before pushing intervention. “Shouldn’t 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?” Romans asked.
Even after Romans’ question, Schiff took an anti-bailout stance. President of Euro Pacific Capital, Schiff said government intervention “will pour gasoline on” the problem that could create a “hyperinflationary Depression.”
“If you want the fire to go out, you need to let the free market work,” Schiff said. He opposed the bailout plan saying that it won’t work and would result in more bailouts and more government intervention. “The stock market will keep falling and the government will take more power and they'll create more damage.”
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, “a dictatorship maybe.” He attacked Schiff’s position saying, “I don’t want to be saluting a dictator in this country, but that’s what you’re advocating.”
Later in the show, the “CNN senior money team” returned to the bailout discussion. Romans noted the persistent “populous outrage” against the bailout package and asked why many Americans opposed to the bailout are “undeterred in their hatred.”
CNN correspondent Susan Lisovicz asserted one reason that the bailout has met so much opposition: “I don’t think that it was ever sold to the public as clearly as it should [have been].”
CNN’s Jennifer Westhoven blamed a “credibility gap” for alienating citizens from supporting the bailout bill. “When you constantly have officials saying things that turn out to be untrue or extremely questionable [about the economy’s stability], even if they’re true by the letter, people just don’t believe it right now.”
Westhoven suggested that “gap” stood in the way of people believing that the bailout was necessary.