• This is a rush transcript from "The Journal Editorial Report," March 15, 2008.

    PAUL GIGOT, HOST: This week on the "Journal Editorial Report," oil hits a new high as the dollar plunges to a new low. How much trouble is the U.S. economy in and what can be done to fix it?

    The rise and fall of New York Governor Eliot Spitzer. How the one time prosecutor and Democratic super star bullied his way to the top and what the press did to enable him.

    Is Barack Obama playing the race card? Accusations are flying.

    And our panel is here to sort it out. But first, the headlines.


    GIGOT: Welcome to the "Journal Editorial Report". I'm Paul Gigot.

    It was a week of economic highs and lows. Oil prices jumped to new highs as the U.S. dollar plunged to an all-time low against the euro and a 12-year low against the Japanese yen. All of this as the Fed announced plans to bump $200 billion into the struggling credit markets, as well as news late this week of an emergency bail out of Bear Stearns, the 5th largest investment bank.

    Joining the panel this week, "Wall Street Journal" columnist and deputy editor Dan Henninger, editorial board member Jason Riley and columnist Mary Anastasia O'Grady.

    Mary, let me go to you first. Wall Street, as you know, is in a panic over the seizing up of the credit markets. They can't find a lot of buyers for their securities. What do you think as you look at the larger economy? Where is the larger problem now?

    MARY ANASTASIA O'GRADY, COLUMNIST: Right now I don't think it's clear we have a recession. The thing that's keeping us out of recession is that we have pretty good job numbers still. We had about a — last week we had about the same number of jobless claims from the week before. We are down about 9.5 percent from this time last year. Still that's a long way from...

    GIGOT: The jobless rate is 4.8 percent, which is historically low.

    O'GRADY: Longs people have jobs they have money to spend. The bigger problem I think is the inflation problem. Prices are rising and the Fed I think has lost some level of credibility. It's tried to deal with the problem in the housing Market by creating money. That's not going to solve the problem.

    GIGOT: That's the issue, Dan. What you're seeing here is — we talk to people in Wall Street all of the time and what they are saying is the Fed has to ease money and behind the curtain ease more, ease more. They want it to solve the credit Market problem. Is Mary right it is creating a bigger problem?

    DAN HENNINGER, COLUMNIST & DEPUTY EDITOR: Literally, it's a bigger problem. As you said, the problem in the larger economy. The larger problem is not the U.S. economy. It's the world economy. When you put more liquidity into the system the dollar declines. it has gone into a steep decline. It is causing instability around the world. As other central banks, quite reasonably, have to decide what they are going to do with their monetary policies. It's making it difficult on countries who's currencies are linked to the dollar.

    The Fed, in the name of internal stability, is creating a lot of stability out in the world.

    GIGOT: I think, Jason, $4 gasoline in parts of the America. Food prices are rising rapidly, healthcare prices rising. That is the source of a lot of economic anxiety.

    JASON RILEY, EDITORIAL BOARD MEMBER: And food and energy isn't part of the core inflation, but the things people have to spend their money on every day.

    GIGOT: Core inflation is the magic number they follow.

    RILEY: Mary is right. The Fed has a credibility problem. One of the worst things Ben Bernanke can do is say we are not going to ease any more.