Your 401(k) is in stocks? It's 'going to go down,' President Bush says
Twenty years ago, President Ronald Reagan gave a global trade speech in a warehouse in the Midwest, and the large shipping containers piled behind him suggested the potential reach of American manufacturers.
Today, President Bush spoke at an office products warehouse in Chantilly, Va., a Washington suburb, and the boxes that formed the backdrop could serve as a less sunny economic metaphor: unsold merchandise.
He used the speech and question-and-answer session that followed to repeatedly defend his decision to intervene in the marketplace with last week's $700-billion support package (he twice used the word "rescue" to describe it, avoiding the more common, but emotional, term: "bailout").
Bush, speaking to local businesspeople, said:
You know, I basically believe that if people make bad decisions in the marketplace, they ought to fail. The problem is, in this case, failure would have cost you. What appeared to be something that might have been isolated, you know, in New York would have cost you the job.
He said he tried to explain this when he was in his hometown of Midland, Texas, this past weekend.
Some old guy said, 'you know, hey,man, what are you doing?' And I said, 'I'm recognizing reality, that this is a serious economic situation that requires strong government action.'
To those who might grumble that the government is bailing out Wall Street execs who made bad calls, Bush said:
Listen, people are angry about the fact that people look like they're dragging out money when there's failure. I understand that. i don't mind rewarding success. It's when people make money on failure. And I think there's going to be -- there needs to be a reassessment of these packages. There needs to be a reassessment of how interconnected people became, how they made promises that they were not in a capital position to fix.
He also sought to soften the blow to stockholders:
No question, in the short term, the value of your 401(k), if you're in stocks, is going to go down. The question is, how fast can we recover this economy?
-- James Gerstenzang
Photo: Susan Walsh / Associated Press
