It’s the Economy, Stupid!

Rudy Giuliani former 107th mayor of New York’s Q&A at World Business Forum

How is NYC doing today?

It’s doing wonderful – crime remains the lowest in the country, its clean, it’s a place that you either love or hate. It’s going through real difficulty lately since the Yankees aren’t in the playoffs – oh you thought I was going to say something about Wall Street. (Laugh) Well Wall Street is home town industry, like steel was to Pittsburgh, 40% of the tax revenues are affected by Wall Street.

Is the $700 billion bailout plan the right for America?

Yes the concept is the right idea – IF the crisis is not that bad then it will make the money back so the sooner we act the cheaper it will be – if we dawdle the price will be much higher. What you need to focus on is you are not bailing out specific companies, you are bailing out an economy. You can see it in NYC – if Wall Street has a bad year – people who deliver food and run the transportation are going to be out of work.

What went wrong?

The amount of capital these firms had set aside as per the capital allocations weren’t enough – what they don’t need is more regulations – they are drowning in regulations – these are heavily regulated industries. This bailout should be accompanied by reform – not just cash! And how about we actually understand the deals we are doing! I guarantee you, some of the people at the top of these organizations didn’t fully understand the nature of these deals.

How are we going to pay for this $700 billion dollar bailout?

The hope is that the growth of the economy will pay for this – not the taxpayer – if it works – it will pay for itself with 2-3% growth – worst case more is needed which is then where the taxpayer need to pay for this. My hope is we don’t go overboard with over-regulation we saw with Enron. The worst thing we can do is over-regulate which will hurt our competitiveness internationally.

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